Czech Banking Association predicts economic recovery, warns of trade risks

The Czech economy is expected to grow by 2.1% this year and 2.4% in 2026, according to a new forecast published on Thursday by the Czech Banking Association. This is a slight downgrade from its previous forecast of 2.3% growth in 2024. Inflation is projected to stay at 2.4% this year before easing to 2.2% next year. However, trade conflicts could slow growth by 0.3 percentage points annually.

Household consumption remains the main driving force of the recovery, with investment also expected to rebound. Wage growth will slow from 6.9% last year to 5.8% in 2024, and real wages are unlikely to reach pre-pandemic levels until 2026. Unemployment is forecast to rise to 4.1% before dipping to 4% next year, with labour demand in other sectors helping offset job losses in industry.