CBA Monitor
CBA Monitor is an interactive and quick overview of information on the development of the economy and the banking sector in the Czech Republic, accompanied by comments from CBA experts.
Updates
Comment by Jaromír Šindel, Chief Economist of the CBA: November consumer price growth did not slow to 2.1% year-on-year only thanks to volatile food prices, which were lower in November. The slowdown in core inflation to 2.7% was probably also due to lower prices for holidays, clothing, household furnishings, as well as lower prices in healthcare and energy. This, and November's move closer to the price inflation target for both headline and core inflation, eases hawkish pressures on the central bank. However, the continued brisk momentum in rent and food and other service prices will not allow the central bank to contemplate an interest rate cut.
Comment by Jaromír Šindel, Chief Economist of the CBA: The manufacturing part of the Czech economy remained subdued in October, which supports expectations of weaker GDP growth at the end of this year. However, a post-covetous historical foreign trade surplus is supporting the crown, which, together with a persistently solid wage pace, supported October retail sales. This part of the recent Czech growth model thus remains unchanged, but this is no longer the case for the construction sector, where persistent weakness in building permits and uncertainty over investment financing pose downside risks next year.
Comment by Jaromír Šindel, Chief Economist of the CBA: Consumer price growth slowed to 2.1% yoy in November. The main reason was a deeper decline in food prices, partly due to a slowdown in core inflation from the recent 2.8%. Thus, although inflation surprised positively, food price volatility and still strong rapid wage growth of 7.1% in Q3 will dampen the CNB's willingness to return to rate cuts. And the same reasons dampen the risks to the CBA's outlook for consumer inflation next year at around 2.2%. There remains a significant gap in the recovery in real gross wages between the market and non-market sectors.
Comment by Jaromír Šindel, Chief Economist of the CBA: The stronger quarter-on-quarter GDP growth of 0.8% in Q3 mainly reflected foreign trade, while the contribution of domestic demand was not as strong as in the previous quarter. Moreover, there has been a continuous decline in fixed investment excluding construction investment, undermining the future potential of the economy and keeping productivity growth low and fuelling inflationary growth in unit labour costs (see five key points below).
The Czech Banking Association's forecast panel expects the domestic economy to grow by 2.5% this year. A slight slowdown to 2.2% will come in 2026. Next year will also see a positive recovery in investment activity, also thanks to the return of stronger corporate lending activity in recent months.
Comment by Jaromír Šindel, Chief Economist of the CBA: The Central Bank, through stricter requirements in the form of recommendations for investment mortgages, has decided to make a modest effort to correct mortgage demand on the real estate market, which remains very tight in terms of prices, mainly due to the supply side - see the drop in building permits.
The Czech economy is expected to grow by 2.5% this year, according to the CBA's forecasting panel, with a slight slowdown of a more technical nature to 2.2% next year. The improved outlook for this year and next reflects the resilience of the Czech economy, supported by higher wage growth, government investment, de-escalation of customs disputes and, to some extent, the expected easing of fiscal policy. The recovery in investment activity will also be positive next year, also thanks to the return of stronger corporate lending activity in recent months.
Last CBA forecast
The CBA forecast is produced each quarter as a consensus forecast of selected domestic banks. A basic summary of the current CBA forecast in several figures and comments is outlined below, detailed information can be found in the
„CBA Forecast“ section.
GDP
0
% yoy
year 2025 | 2026
The domestic economy is expected to slow quarter-on-quarter growth to 0.4% in late 2025, after an average gain of 0.6% so far. For 2026, we expect it to add 0.62% on average quarter-on-quarter and thus actually grow by about 2.5% during the year. In 2024, Czech GDP will have grown by 0.5% quarter-on-quarter on average.
Unemployment
0
%
year 2025 | 2026
The registered unemployment rate had already climbed to 4.7% in October 2025 on a seasonally adjusted basis. But the continued solid momentum of the economy should stabilise unemployment in 2026 and continue to fall slightly in 2027, but remain above this year's average.
Average wages
0
%
year 2025 | 2026
Growth in average nominal wages is expected to slow to 5.6% year-on-year in 2026, after a probably surprising 7.2% increase in 2025, which repeated the same growth of the previous year. With little change in price dynamics, we expect stronger real wage growth: 3.3% in 2026 after a 4.6% improvement in 2025.
Inflation
0
% yoy
year 2025 | 2026
Stronger wage growth is reflected in a slightly higher outlook for core inflation at 2.5% next year, partly offset by the stronger koruna and the expected unchanged central bank interest rate. However, headline consumer inflation is expected to slow to an unchanged 2.2% yoy next year from 2.5% this year, and we expect it to accelerate slightly to 2.3% in 2027.
CNB 2-week repo rate
0
%
end of 2025
However, stronger wage growth together with slightly higher core inflation dynamics are reflected in the outlook for the CNB's stable interest rate at 3.50%. And it is expected to remain at half its 2022-2023 peak level during 2027.
The Crown
0
CZK/€
end of 2025
The stronger koruna in the forecast reflects a combination of the better performance of the Czech economy, the current level of the koruna exchange rate and the weaker US dollar. The outlook for the interest rate differential remains broadly unchanged.
Jaromír Šindel
Chief Economist CBA
Jaromír Šindel is the Chief Economist of the Czech Banking Association, where he uses his extensive experience in the field of macroeconomic analysis and forecasting. Prior to that, he worked for more than 17 years as the Chief Economist at Citibank. In 1999 - 2004, he received a master’s degree from the University of Economics Prague with a major in economic policy and continued to focus on this field during his doctoral studies, which he completed in 2011.
During his time at Citibank (2007-2024), he worked mainly on macroeconomic analysis with a focus on economic trends in the Czech Republic, Slovakia and Slovenia. He prepared forecasts of economic developments and economic policy, including the impact on financial markets. Related to this, he also monitored global economic and political trends and their impact on the local economic situation.