Czech economy expected to grow in 2025: What it means for your wallet

The Czech economy is expected to gain momentum in 2025, with growth projected at approximately 2 percent. This rebound is attributed to stronger household spending and a gradual decline in inflation, according to an annual report from the Ministry of Finance.

The ministry's forecast draws on analysis from 13 domestic institutions, including the Czech National Bank and Charles University. Here’s what the experts predict—and how it could impact living costs in Czechia.

After a lackluster year of 1 percent growth, the economy is expected to gain traction. Cyrrus' chief economist, Vít Hradil, attributes this to improving domestic conditions.

“The Czech economy in 2025 will be driven primarily by domestic factors, while challenges are likely to stem from abroad. Household consumption is set to grow, with significant ground to make up after several weak years,” he told the Czech News Agency ČTK.

Lower inflation, improving economic sentiment, low unemployment, rising real wages, and falling interest rates are expected to fuel the recovery. Cheaper loans and stronger sales prospects should encourage businesses to ramp up investments. However, weak foreign demand, particularly in the industrial sector, may continue to weigh on growth.

The Ministry of Finance and the Czech National Bank are slightly more optimistic, predicting growth of 2.5 percent and 2.4 percent, respectively.

Inflation, which has been a pain point in recent years, is expected to hold steady at an average of 2.5 percent.

"One of the main drivers of rising inflation will be the accelerating dynamics of food prices, although this is expected to slow in the second half of the year," said XTB's chief economist Pavel Peterka. "Meanwhile, price growth in the services sector will remain elevated. Conversely, the fuel segment is anticipated to have an anti-inflationary effect."

This means that services—like dining out or getting your car repaired—will remain pricier, though at a more moderate pace than in 2024. On the bright side, falling fuel prices could help counterbalance inflationary pressures, making your daily commute a bit less costly.

Wages are expected to rise by 5.5 to 6 percent in 2025, outpacing inflation and offering a real boost to household incomes. While this means more money in your pocket in real terms, a full recovery to pre-pandemic purchasing power remains a few years away.

“According to our forecast, the restoration of pre-pandemic real wages will occur around mid-2026, and the same timeline should apply to household consumption,” said Martin Gürtler, an analyst at Komerční banka. Analysts predict a steady increase in household spending, though a significant surge in consumer activity is unlikely for now.

Unemployment might tick up slightly to 4 percent, largely due to struggles in the industrial sector reliant on sales to Germany. But this still places the Czech Republic among countries with the lowest jobless rates in the EU. Experts say layoffs will likely be limited, and other sectors are poised to absorb displaced workers.

“We expect companies to exercise caution in hiring throughout 2025. Instead of onboarding new employees, the focus will likely shift toward improving the efficiency of existing teams,” Martin Jánský, CEO of the personnel firm Randstad ČR told ČTK.