No cure for Czech Republic productivity malaise in sight
The Czech Republic’s economy faces challenges with stagnant productivity and demographic issues, despite some growth in specific sectors. Discover more insights.
The Czech Republic faces a significant productivity malaise, with long-term GDP growth forecasts downgraded to an average of 2% over the next decade—down from 2.9% during 2000-2019. This stagnation is primarily attributed to a lack of productivity growth since 2019, with output per hour worked effectively stalled.
Labour supply has been the main driver of GDP growth, largely due to the integration of around 400,000 Ukrainian refugees and rising participation rates. However, this reliance on labour supply is unsustainable, with demographic challenges such as low fertility rates and an ageing population expected to hinder future growth.
While there are bright spots in sectors like ICT and high-end manufacturing, these gains have not translated into broader economic improvements. The government’s industrial strategy identifies key issues but lacks the necessary funding and prioritises other areas, raising concerns about its implementation.
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