Czech Republic
A proud nation with a good sense of humour, highly educated labour force, and track record of the invention (from propeller to contact lenses) and high-quality products (cars, beer, glass)
Total area: 78,864 sq km (comparable to Rep. of Ireland)
Population: 10.7 million
Government type: Parliamentary democracy
Administrative division: 14 administrative regions
Capital + other major cities: Prague (1.3 million) + Brno (396,000), Ostrava (283,000), Pilsen (181,000)
Currency: Czech Crown (koruna, CZK)
Languages: Czech (official)
Ethnicity: Czech (83.8%), Moravian (5.0%), Slovak (1.3%), Ukrainian (1.1%), other (4%)
Religion: Rom. Catholic 7.1%, other 6%, none 47.8%, unspecified 30.1%
President: (Mr.) Petr PAVEL (since 9 March 2023)
Prime Minister: (Mr.) Petr FIALA (since 28 November 2021)
Date of EU accession: 1 May 2004
KEY FEATURES
- A leading economy in the CEE region in terms of prosperity, stability, market size, purchasing power, and ease of doing business.
- GDP per capita (PPP) is among the highest in the CEE region
- 3rd largest nominal GDP in CEE, after Poland and Romania
- Strategic location in the heart of Europe, bordering Germany and Poland
- Highly successful in attracting foreign direct investment, offering a favorable business environment.
- Strong manufacturing base, particularly in automotive, engineering, and electronics,
- Regional headquarters, R&D operations, and service centers for multinational companies
- Educated and highly skilled labor force
- One of the lowest unemployment rates in the EU
MACROECONOMIC OVERVIEW
The Czech Republic is widely regarded as one of the most stable and prosperous countries in Central and Eastern Europe (CEE). It has accomplished a profound transition towards a market-driven economy including privatization and restructuring of most of its industrial and service sectors. The Czech Republic has successfully attracted significant foreign direct investment, bolstering its economic development. Its capital, Prague, stands out as a major cultural and economic hub, drawing millions of tourists annually.”
The country enjoyed several years of continued economic growth up to the financial crisis when the demand for Czech goods plummeted. As a small, open, export-driven economy, the country’s performance is sensitive to changes in the economic performance of its main export markets, particularly Germany.
In recent years, the Czech economy has demonstrated resilience, supported by strong domestic demand, rising tax revenues, and robust exports. However, the COVID-19 pandemic significantly impacted economic activity, with total output contracting by 5.3% in 2020. The manufacturing and automotive sectors, which are central to the economy, faced disruptions due to international supply chain bottlenecks.
Currently, the country’s economy is experiencing a cautious recovery, driven by strong domestic consumption, rising real wages, and improving consumer confidence. Economic growth is projected at 1.9% in 2025, up from 1.2% in 2024, while inflation has moderated significantly.
In 2025, the country has fully eliminated its dependance on Russian oil, marking a historic shift after 60 years of reliance. This achievement aligns with broader European efforts to diversify energy sources and enhance resilience against geopolitical risks.
Selected economic indicators, Czech Republic, 2018 – 2024
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | ||
| GDP |
|
|
|
|
|
|
|
|
| Real GDP growth |
%
|
2.8
|
3.6
|
-5.3
|
4.0
|
2.8
|
0.0
|
1.2
|
| GDP at current prices |
€ bn
|
210.92
|
225.56
|
215.24
|
238.71
|
276.23
|
305.9
|
320.74
|
| Foreign trade |
|
|
|
|
|
|
|
|
| Exports |
€ bn
|
162.87
|
166.22
|
152.8
|
173.25
|
207.8
|
218.2
|
220.8
|
| Imports |
€ bn
|
149.60
|
152.80
|
138.1
|
165.97
|
205.4
|
202.5
|
200.8
|
| Balance |
€ bn
|
13.27
|
13.42
|
14.7
|
7.27
|
2.3
|
15.6
|
20
|
| Prices |
|
|
|
|
|
|
|
|
| CPI – average inflation rate |
%
|
2.1
|
2.8
|
3.2
|
3.8
|
15.1
|
10.7
|
2.4
|
| PPI – industry – average |
%
|
0.7
|
1.7
|
0.6
|
6.2
|
24.2
|
5.0
|
0.8
|
| Employment |
|
|
|
|
|
|
|
|
| Registered unemployment |
%
|
2.2
|
2.0
|
2.6
|
2.8
|
2.2
|
2.6
|
2.6
|
| Average monthly gross wage |
€
|
1,207
|
1,294
|
1,309
|
1,426
|
1,565
|
1,796
|
1,878
|
| Exchange rates* |
|
|
|
|
|
|
|
|
| USD/CZK average (CZK per USD) |
|
21.75
|
22.93
|
23.21
|
21.67
|
23.36
|
22.19
|
23.2
|
| CZK/EUR average |
|
25.65
|
25.67
|
26.46
|
25.64
|
24.57
|
24.01
|
25.12
|
Source: Eurostat, International Monetary Fund and Czech National Bank, ECB, OECD, 2018-2024
* For the current exchange rate, please see www.xe.com
KEY SECTORS
The Czech Republic’s agricultural sector has undergone significant transformation since the 1990s, transitioning from a state-controlled system to a market-oriented one. It contributes approximately 1.5% to the country’s GDP and employs about 2.5% of the labor force. Key agricultural products include sugar beets, potatoes, wheat, barley, rapeseed, and poultry.
The industrial sector remains a cornerstone of the Czech economy, accounting for nearly 37% of GDP. The country is the second most industrialized in the EU after Ireland. Beyond traditional industries such as automotive manufacturing, iron and steel production, metalworking, chemicals, engineering, food processing, textiles, and glass, the Czech Republic has seen significant growth in high-value sectors like biotechnology, life sciences, precision engineering, nanotechnology, and specialized IT and SW.
Services dominate the Czech economy, contributing approximately 61% to GDP. Trade, transportation, accommodation, and food services are particularly robust, reflecting strong domestic consumption and a growing tourism sector.
Automotive
The automotive industry, including the manufacture of components, is a crucial part of the Czech economy, accounting for 26% of the manufacturing output and 23% of total exports. It directly employs over 180,000 people across OEMs and component suppliers. The country ranks second globally in passenger car production per capita and tenth in total vehicle production. The industry includes close to 200 component suppliers, most of which are foreign-owned. Major manufacturers such as Škoda Auto (part of Volkswagen), Toyota, and Hyundai operate plants in the Czech Republic, collectively producing about 1 million vehicles annually.
Electrical and Electronic Products
another sector with a long-standing tradition, contributing over 14% to total manufacturing output. Highly export-oriented, it includes the production of components, consumer electronics, avionic radars, medical and optical equipment, and advanced scientific instruments. The sector is marked by a high proportion of imported materials and components, employing nearly 180,000 workers across over 17,000 companies. Notably, the country produces one-third of the world's electron microscopes, underscoring its significant role in high-precision instrumentation, and is emerging as a hub for advanced electronics and semiconductors. Specialization in power electronics, integrated circuit design, and high-value equipment positions the Czech Republic as a strategic supplier within the European chip supply chain.
Engineering, Machine tools & Precision engineering
Another sector in which the Czech Republic has an excellent reputation with many leading international firms undertaking R&D and engineering product development through local subsidiaries. Major investors include ABB, Parker Hannifin, and Honeywell. It is the third-largest manufacturing sector in the country, employing over 126,000 people.
The Plastics and Rubber Products industry
A vital component of the nation’s advanced manufacturing base, tightly integrated with the automotive and electronics sectors. This subsector accounts for roughly 7% of total manufacturing output, making it the second-largest branch within the broader chemical sector (after basic chemicals). It directly employs around 70,000 people, and more than 80% of its output is exported. Strategic investment incentives and collaborative R&D programs have driven technological upgrading, particularly in high-performance polymers and technical elastomers used in automotive, aerospace, and medical device applications.
Biotechnology and Life Sciences
The Czech Republic is establishing itself as an important player in European biotechnology production, with capabilities spanning molecular biology, pharmaceuticals, diagnostics, cell therapies, and advanced biological products. The sector is highly diverse and technologically sophisticated, combining world-class academic research with competitive manufacturing capabilities. Nearly 400 entities are active in this sector, including companies as well as research and educational institutions. The Czech biotech sector is strongly export-oriented, with companies exporting 90%+ of their production.
Shared services and R&D/technology centres
The Czech Republic is widely recognized by multinational corporations as a prime location for regional expansion and the establishment of regional headquarters. It boasts the second-largest business support market in Central and Eastern Europe, hosting over 380 shared service centers. Leading companies with operations in the country include Accenture, ExxonMobil, Honeywell, Monster Group, Siemens, SAP, Anheuser-Busch InBev, Johnson Controls, Covidien, and many others.
Tourism
The Czech Republic is one of Europe’s most popular tourist destinations, celebrated for its rich historical heritage, spa resorts, and natural attractions. The country boasts 17 UNESCO World Heritage Sites, over 200 castles and chateaux, more than 40 protected historical towns, and 36 spa towns. Prague, the capital, continues to be the country’s premier attraction.
EXPORTS & IMPORTS
The Czech Republic is exceptionally open to international trade – its export/GDP ratio at 74.8% (2022) is one of the highest in Europe, with imports comparably high at more than EUR 180 billion per year. About 80% of Czech exports go to other EU member states which places the country at the top of the EU ranking.
2023 export and import data:
Main import partners:
Germany – 20.9%
China – 17.6%
Poland – 8%
Slovakia – 4.4%
Italy – 3.9%
Main export partners:
Germany – 32.8%
Slovakia – 7.7%
Poland – 7.3%
France – 4.9%
Austria – 4.2%
Italy – 4%
Market Research in the Czech Republic
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