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Economic Overview

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Covid-19 weighed on the fundamentals of the Czech economy that had supported growth: domestic demand, tax, revenues and exports. In 2021, the pace of growth was not sufficient to return fully to the pre-pandemic level, which was only achieved by mid-2022. Over the year, the country’s GDP recorded a moderate growth of 1.9% driven by an uptick in investment activity, with the spillover effects of Russia’s invasion of Ukraine and high energy prices hampering growth. Private consumption is expected to contract in 2023, reflecting a decline in households’ purchasing power. Due to weaker foreign demand and the tightening of financial conditions, the IMF forecasts a GDP growth of 1.5% this year, followed by a better performance in 2024 (+3.9%).

The Czech economy had already shown signs of slowing before the outbreak of Covid-19 amid lower growth in Germany and trade uncertainties, as its industry-based economy, which relies on imports, was strongly affected by supply chain disruptions and high energy prices. In 2022, government revenues increased due to high inflation; however, expenditures were also on the rise owing to the automatic indexation of pensions with inflation and the support packages to mitigate the impact of energy prices (with total net costs estimated at 1% of GDP by the EU Commission), hence the total government budget deficit was estimated at 4.3% of GDP by the IMF. The budget deficit is forecast to decrease to 3.4% of GDP in 2023 and 2.9% in 2024 as revenues will be boosted by a windfall tax on the largest energy companies and banks as well as a levy on revenues above a certain price ceiling for electricity producers. The public debt-to-GDP ratio is still low compared to other EU Member States: it was estimated at 41.5% in 2022 and should remain stable over the forecast horizon. For 2022 as a whole, headline inflation was estimated at 16.3%, reflecting the higher cost of domestic production and imports. The IMF expects the cap on retail gas prices to mitigate inflation in 2023 (8.6%) before it returns to levels closer to the Central Bank’s target in 2024 (2.5%).

Czechia has a tight labour market and a low share of temporary contracts, with one of the lowest ratios of unemployment in Europe, at 2.5% in 2022 (from 2.8% one year earlier). Market conditions may get tighter as Ukrainian refugees join the labour market, but the unemployment rate is expected to remain low this year and the next (2.3% - IMF). The IMF estimated the country’s GDP per capita (PPP) at USD 48,919 in 2022, slightly below the EU average, although nominal wage growth lagged behind inflation last year, reducing real disposable income.

Main Indicators 202020212022 (E)2023 (E)2024 (E)
GDP (billions USD) 245.98281.79290.40330.48355.86
GDP (Constant Prices, Annual % Change) -
GDP per Capita (USD) 23,00126,33127,61331,36833,745
General Government Balance (in % of GDP) -5.5-5.4-3.8-3.7-2.4
General Government Gross Debt (in % of GDP) 37.742.042.343.843.3
Inflation Rate (%) 3.23.815.111.85.8
Unemployment Rate (% of the Labour Force)
Current Account (billions USD) 4.90-2.36-6.280.958.58
Current Account (in % of GDP) 2.0-0.8-

Source: IMF – World Economic Outlook Database , October 2021

Country Risk

See the country risk analysis provided by La Coface.



Main Sectors of Industry

The agricultural sector went through a serious crisis in the 1990s and remains highly subsidised. Nowadays, it accounts for 1.8% of the country's GDP and employed 3% of the labour force (World Bank, latest data available). The country has an agricultural area of 3.5 million ha and a forest area of 2.65 million ha (FAO). The main agricultural products are sugar beet, potatoes, wheat, barley and poultry. Organic farming in the country is characterized mainly by the extensive breeding of cattle, goats and sheep in less favourable agricultural areas. In 2022, the EU Commission approved a EUR 20.2 million scheme to support Czech agricultural producers in the context of Russia's invasion of Ukraine, which consists mainly of a reduction of the principal of operating loans granted to primary agricultural producers. According to the latest figures from the Czech Statistical Office, cereals production increased by 26.8% year-on-year in 2022 reaching CZK 58.1 billion, while the net value output rose by 5.6%.

Industry accounts for 30.3% of GDP and employs 37% of the labour force. Growth in performance has been accompanied by an increase in the productivity of the labour force. The automotive sector is by far the largest industry, with companies like Skoda (owned by Volkswagen). Since 2005, foreign investors such as Toyota and PSA have also started producing cars in the Czech Republic. The Czech automotive industry now employs more than 150,000 people and accounts for more than 20% of both Czech manufacturing output and Czech exports. The Czech electronics and electrical engineering sector accounts for more than 14% of total manufacturing output, which makes it the second-largest sector in the economy (over 17,000 companies employ more than 180,000 workers in the sector). Overall, the manufacturing industry contributes 21% of GDP.

Services account for 58.8% of GDP and employ nearly 60% of the active population. The tourism sector recorded a pace of sustained growth in recent years, which was partially hampered by the COVID-19 pandemic. Nevertheless, the sector started its recovery in 2022: according to data from the Czech Statistical Office, the country hosted 2.8 million visitors in the first quarter of the year, a sharp rise compared with the mere 280,000 visitors recorded in all of the previous year. In 2021, there were 46 licensed banks operating in the Czech Republic: four large banks, five medium-sized banks, nine small banks, 23 branches of foreign banks and five building societies. 37 entities were controlled by foreign owners, of which 12 were banks and 25 were branches. At the end of the year, the total value of the banking sector's assets increased by about 7%, to EUR 340 billion, representing about 141% of the country’s GDP.

Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 2.7 37.3 60.1
Value Added (in % of GDP) 1.8 30.3 58.8
Value Added (Annual % Change) -14.8 3.3 4.3

Source: World Bank - Latest available data.

Monetary Indicators 20162017201820192020
Czech Crown (CZK) - Average Annual Exchange Rate For 1 USD 24.4423.3821.7322.9023.21

Source: World Bank - Latest available data.



Foreign Trade

Czech Republic’s economy is very open to the outside world: according to the World Bank, external trade accounts for 143% of the GDP. The automobile industry is the backbone of trade, both for imports and exports, vehicles and spare part manufacturing accounting for nearly one-fifth of Czech exports, followed by computers (6.6%), and telephones (5%). Imports are led by computers (5.3%), parts and accessories for tractors (5.1%), telephones (5.1%), and motor cars (2.3% - data Comtrade).

As a medium-sized, open, export-driven economy, the Czech market is strongly dependent on foreign demand, especially from EU partners. In 2021, Germany was Czech Republic's major trading partner, receiving 32.4% of its exports and supplying 22.4% of its imports. Slovakia was the second top destination for Czech exports (8.1%), followed by Poland (6.7%), France (4.6%) and Austria (4.5%). China (16.7%) was the second-largest supplier of goods and services to the Czech Republic after Germany, followed by Poland (8.2%), Slovakia (4.4%) and Italy (4.2% – data Comtrade).

Czechia recorded a structurally positive trade balance since entering the EU. In 2021, the country’s trade balance was estimated to be positive by 3% of GDP by the World Bank (from 6.7% one year earlier). In the same year, exports of goods totalled USD 226.4 billion (+17.9% year-on-year) whereas imports stood at USD 211.5 billion (+24% y-o-y). Concerning trade in services, exports increased to USD 29.7 billion against USD 24.6 billion of imports (+14% and +14.5%, respectively). According to the latest figures from the Czech Statistical Office, in the first three quarters of 2022, goods exports increased by 13.4% year-on-year, with imports rising at a faster pace (+19.2% y-o-y). Overall, the trade balance in goods was negative by CZK 65.954 million (around USD 3.1 billion).

Foreign Trade Values 20172018201920202021
Imports of Goods (million USD) 163,352184,659179,039170,584211,508
Exports of Goods (million USD) 182,142202,238199,128192,057226,407
Imports of Services (million USD) 21,63625,04525,74521,50024,624
Exports of Services (million USD) 26,87530,58430,31126,06329,706

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20172018201920202021
Foreign Trade (in % of GDP) 150.5147.9141.8133.1142.5
Trade Balance (million USD) 10,9009,37910,48212,2663,454
Trade Balance (Including Service) (million USD) 16,25514,91915,11616,7098,542
Imports of Goods and Services (Annual % Change)
Exports of Goods and Services (Annual % Change)
Imports of Goods and Services (in % of GDP) 71.571.067.963.269.8
Exports of Goods and Services (in % of GDP) 79.076.973.969.972.7

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20222023 (e)2024 (e)2025 (e)2026 (e)
Volume of exports of goods and services (Annual % change)
Volume of imports of goods and services (Annual % change)

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

International Economic Cooperation
Czech Republic is a member of the following international economic organisations: IMF, European Union, ICC, Central European Initiative (CEI), WTO, OECD, Schengen Convention, among others. For the full list of economic and other international organisations in which participates Czech Republic click here. International organisation membership of Czech Republic is also outlined here.
Free Trade Agreements
The complete and up-to-date list of Free Trade Agreements signed by Czech Republic can be consulted here.

Main Partner Countries

Main Customers
(% of Exports)
Germany 32.4%
Slovakia 8.1%
Poland 6.7%
France 4.6%
Austria 4.5%
See More Countries 43.7%
Main Suppliers
(% of Imports)
Germany 22.1%
China 16.5%
Poland 8.1%
Slovakia 4.4%
Italy 4.2%
See More Countries 44.6%

Source: Comtrade, Latest Available Data



Political Outline

Current Political Leaders
President: Petr Pavel (since 8 March 2023) - Independent
Prime Minister: Petr Fiala (since 17 December 2021) - ODS
Next Election Dates
Presidential: 2028
Senate: October 2024
Chamber of Deputies: October 2025
Current Political Context
2022 was the first year in charge for the new government led by Petr Fiala and formed by a five-party coalition formed by the conservative Civic Democratic Party (ODS), the parties in the Together alliance (the Christian and Democratic Union-Czechoslovak People's Party (KDU-CSL) and Top 09), as well as the progressive Pirate Party and the centrist Mayors.
The year was characterized by the Russian invasion of Ukraine, which led to a surge in the number of refugees: as of December 2022, the Czech Republic had granted temporary protection to nearly 470,000 refugees fleeing Ukraine, accounting for 4.4% of the total population. The country is also a member of NATO, and the government supported the EU sanctions against Russia while also providing military aid.
Presidential elections took place in January 2023. While incumbent president Miloš Zeman was not eligible to run due to the two-term limit, former army chief Petr Pavel won the presidential election after a campaign featuring strong backing for NATO and the European Union and support for aid to Ukraine.
Main Political Parties

Parties need to secure 5% of the vote in order to obtain parliamentary representation. The country's main political parties are:

Executive Power
The President is the chief of state and is elected by direct public vote for a five-year term. The President has limited specific powers, the most important of which are to return enacted laws to the Parliament and to dissolve the Parliament under specific constitutionally outlined conditions. The President appoints the Prime Minister and the Cabinet based on the recommendation of the Prime Minister. The Prime Minister is the head of the government and holds executive powers, including the right to set the agenda for most foreign policies and to choose governmental ministers. The Prime Minister is generally the head of the majority party or coalition in the Parliament and carries considerable political power.
Legislative Power
The legislature is bicameral. The Parliament consists of: the Senate (the upper house), its 81 members elected by popular vote to serve six-year terms (with one-third of its members elected every two years) and the Chamber of Deputies (the lower house) with its 200 members elected by popular vote to serve four-year terms. The executive branch is dependent on parliamentary support. The Prime Minister cannot dissolve the parliament without the approval of both the President and the members of the Parliament.


COVID-19 Country Response

COVID-19 epidemic evolution

To find out about the latest status of the COVID-19 pandemic evolution and the most up-to-date statistics on the COVID-19 disease in Czech Republic, please visit the dedicated portal of the Czech Ministry of Health (in Czech).
For the international outlook you can consult the latest
situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.

Sanitary measures

Latest information on the public health situation, relevant advice and COVID-19 safety measures are available on the portal of the Czech Ministry of Health dedicated to COVID-19. Furthermore, the Ministry of Interior provides an overview of the measures adopted against the epidemic.

Travel restrictions

The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.
The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.

Import & export restrictions

For the information on all the measures applicable to movement of goods during the period of sanitary emergency due to the COVID-19 outbreak (including eventual restrictions on imports and exports, if applicable), please consult the official portal (both in Czech) and the website of the Czech Customs Administration. Further details are available on the "Customs measures" section of KPMG's website.
The “Guidelines for border management measures to protect health and ensure the availability of goods and essential services” issued by the European Commission can be consulted
For a general overview of trade restrictions due to COVID-19 pandemic, please consult the section dedicated to Czech Republic on the
International Trade Centre's COVID-19 Temporary Trade Measures webpage.

Economic recovery plan

For information on the economic recovery scheme put in place by the government of Czech Republic to address the impact of the COVID-19 pandemic refer to the handbook summary in English here and to the website of the Ministry of Labour and Social Affairs. An overview of the measures in English is available on KPMG's website.
The information on the EU’s economic response to COVID-19 and the actions to minimise the fallout on the EU member states’ economies of the COVID-19 outbreak is available on the websites of the
European Commission and the European Council.
For the general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic) taken by the Czech government to limit the socio-economic impact of the COVID-19 pandemic, please consult the section dedicated to Czech Republic in the
IMF’s Policy Tracker platform.

Support plan for businesses

For the information on the local business support scheme established by the Czech government to help businesses to deal with the economic impacts of the COVID-19 epidemic on their activity, please consult the website of the Ministry of Industry and Trade and the official governmental portal (in Czech). Further information can be found on the website of the Czech Chamber of Commerce (in Czech).
For a general overview of international SME support policy responses to the COVID-19 outbreak refer to the OECD's SME Covid-19 Policy Responses document.

You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.

Support plan for exporters

To find out about the support plan for exporters put in place by the Czech government, including exemption from customs duties and VAT on imports of goods related to COVID, please visit the website of the Czech Customs Administration (in Czech). Further information can be consulted on the official portal (both in Czech).
The European Commission adopted a Temporary Framework for State aid measures to support the economy in the COVID-19 outbreak, which enables short-term export credit insurance to be provided by the State where needed.