Next year too, the Czech economy will do fairly well. The economy will continue to grow decently, inflation will decrease compared to this year and unemployment will increase only slightly. However, after the rapid increase in wages in previous years, their growth will slow down in 2026. At the same time, experts expect the koruna to strengthen slightly against the euro.
However, households and companies must prepare for the fact that loans will not have much room for discounting, as the Czech National Bank (ČNB) will leave its key rate unchanged.
The Babiš factor
Economic growth should remain strong, even though the largest trading partner of Czech companies – Germany – is experiencing difficulties. “The growth of the Czech economy will slow slightly compared to this year and the real gross domestic product (GDP) will increase by 2.2 percent,” estimates Raiffeisenbank analyst Martin Kron. Most of the economists interviewed expect the domestic economy to grow by 2.5 percent this year, and next year they also estimate a slight slowdown in economic growth.
Specifically, Československá obchodní banka (ČSOB) expects a two percent GDP growth. “It will be a consequence of the reverberations of American tariffs in European industry, slightly more significant growth in imports and slightly slower growth in wages,” says Jan Bureš, ČSOB’s chief economist. The OECD has the same estimate.
“The Czech economy is very likely to have a good year,” says the chief economist of Investika Vít Hradil and continues: “Whether it will be great depends to a large extent on developments in Germany.” The German market is key for domestic exporters.
But the German economy is currently experiencing difficult times, and next year will be no different. Advisers to German Chancellor Friedrich Merz recently cut their growth forecast for next year below one percent. “The biggest risk for the Czech economy is a weaker-than-expected recovery in foreign demand, especially in Germany,” warns XTB Chief Economist Pavel Peterka.
However, there are more factors that will influence the performance of the domestic economy, from the development of the war in Ukraine and American trade policy to the Green Deal and the steps taken by the new government of Prime Minister Andrej Babiš.
“Just like this year, geopolitical and economic developments in the world will be absolutely decisive for the Czech economy next year,” says Moneta Money Bank Chief Economist Petr Gapko. According to Peterka, economic growth will be supported by higher spending by the government, which “presented a number of large and expensive priorities in the program statement”.
However, government spending will not only affect the performance of the Czech economy, but also inflation. This is because next year the state will pay fees for subsidized energy sources instead of consumers, which will add roughly 17 billion more to the state budget. The state’s total costs for fees will thus rise to more than 41 billion crowns. “Average inflation could drop to 2.1 percent next year also thanks to the new government’s energy measures,” adds Kron.
The prices of goods and services will thus rise by only a few tenths above the target of the Czech National Bank, which is two percent. According to economists, even a further slowdown in price growth will not translate into a reduction in the CNB’s key rate. “Due to continued pro-inflationary pressures, according to our forecast, the repo rate will remain at the current level of 3.5 percent for the whole of next year,” says Česká spořitelna economist Michal Skořepa.
The central bank is concerned, for example, about the still strong rise in prices in the area of services. Inflationary pressure will also be increased spending by the government, which will have to borrow more money from the markets, which will push interest rates up. Next year, there won’t be many reasons to discount loans for companies and consumers. If the estimates regarding the CNB rate come true, mortgage loans will not become cheaper either.
Slower wage growth
Price growth, on the other hand, will help keep slower wage growth in check. For this year, most economists expect their growth by seven percent, but next year they estimate their increase by less than six percent.
Even this estimate may still be optimistic, at least as far as the private sector is concerned. A survey of companies by the Comp&Ben Association conducted by BD Advisory and supplemented by data from Mercer and Trexima shows that most companies plan to increase wages by four percent in 2026.
“The period of post-inflationary wage growth is definitely behind us. Companies maintain a moderate wage growth above inflation, but the pace is significantly more sober,” says Tomáš Jurčík, director of the Comp&Ben Association, which brings together key domestic employers and deals with wage analysis and compensation systems.
After all, wage increases will not record even a slight increase in unemployment. However, according to Skořepá, the unemployment rate should remain below five percent. According to him, it will help to remove “unhealthy tension” from the Czech labor market.
Next year, the koruna will continue to strengthen against the euro and the dollar. “The exchange rate of the crown against the dollar will fall to the range of 20 to 20.5 crowns for one dollar. For the euro, we will be in the range of 24.2 to 24.6 crowns for one euro,” estimates Peterka.
At the beginning of this year, one euro cost 25.16 crowns, but now it is 24.3 crowns. At the end of the year, around 24.5 crowns were paid for one dollar on the interbank market, now it is 20.8 crowns. Although the strengthening of the Czech currency will not please exporters, it will, on the contrary, make travelers and importers happy. “For the end of next year, we expect an exchange rate of around 23.8 crowns per euro,” adds Patria Finance Chief Economist Dominik Rusinko. According to him, the hawkish CNB, the favorable development of the domestic economy and the continued weakening of the dollar play in favor of the koruna.