Czech Economy Grows in 2025 Mainly Thanks to Strong Domestic Demand

The Czech Republic recorded solid economic growth in 2025. The development was driven primarily by rising real wages and more stable price trends.

Economic performance in the Czech Republic in 2025 was mainly supported by domestic demand. Falling inflation and rising real wages boosted consumer sentiment, while the services sector and construction in particular recorded growth.

Gross domestic product (GDP) grew by 2.6 per cent over the full year. In the fourth quarter, the economy expanded by 0.6 per cent compared to the previous quarter and by 2.6 per cent year-on-year. “Domestic demand was the main driver of growth in 2025 – including in the final quarter. The stable recovery in consumption is closely linked to easing inflation and solid real wage growth,” said Jaroslav Sixta, Vice-Chair of the Czech Statistical Office (ČSÚ).

Investment also picked up again after declining in previous years, particularly thanks to a marked recovery in the construction sector. While many service sectors recorded a strong year, a moderate recovery also became visible in the industrial sector towards the end of the year. Although foreign trade remained clearly in surplus, the increase in the surplus was limited as export dynamics accelerated in parallel with imports.

Foto: Freepik

Gross value added rose by 2.8 per cent in real terms in 2025. This growth was driven primarily by services – especially trade, transport, hospitality, as well as information and communication services. The construction sector recorded its strongest growth rate since 2002. In particular, the information and communication sector and consumer-related services remained key growth drivers, while industry regained momentum towards the end of the year.

Inflation Eases – Wages and Employment Rise in 2025

Consumer prices increased by 2.5 per cent over the full year. The main drivers were food, non-alcoholic beverages, and housing and energy costs. Above-average price increases were also recorded in hospitality, accommodation, and leisure and culture. By contrast, price developments in clothing, footwear and the transport sector had a dampening effect. In the fourth quarter, the year-on-year inflation rate eased to 2.2 per cent.

The average gross monthly wage reached 49,215 koruna in 2025, representing an increase of 7.2 per cent compared to the previous year. In real terms, this corresponds to growth of 4.6 per cent. In the fourth quarter, the average wage rose to 52,283 koruna, marking a nominal increase of 7.4 per cent. Real wages increased by 5.1 per cent during this period.

Employment increased by 1.1 per cent over the course of the year, mainly driven by the public sector. Labour productivity also improved slightly. Despite a moderate rise, the unemployment rate remained well below the long-term average.