Czech Republic: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Czech Republic

The 2023 Article IV Consultation with Czech Republic discusses that economic activity slowed down notably in 2023 but a rebound is expected in 2024, driven by a recovery in domestic demand. Growth is expected to pick up in 2024, led by consumption and fixed investment—as inflation fades and real income recovers—supported by net exports. Nevertheless, over the medium term, gross domestic product is not expected to reach the levels consistent with its pre-pandemic trend. Inflation peaked in 2022 and is projected to meet its target by early 2025. Risks are tilted to the downside for activity and to the upside for inflation. The priorities are reducing inflation to target, restoring fiscal space, and maintaining macro-financial stability, while remaining nimble in the face of high uncertainty. Boosting potential growth is essential as structural shifts weigh on the medium-term outlook. With the economy being impacted by structural changes, including population aging and a global shift away from fossil-fuel based power, aiding labor and capital reallocation, boosting digitalization and productivity, and accelerating the green transformation are key goals.