Czech Investment Rises 7.1%: GDP Grows 1.9%
The Czech economy grew by 1.9% year-over-year in the second quarter of 2026. Compared to the first quarter, gross domestic product rose by 0.4%. This was reported by the Czech Statistical Office (ČSÚ) on August 28. The agency thus revised downward its flash estimate from late July, which had shown growth of 2.0%.
Investments provided the biggest boost. Gross fixed capital formation rose by 7.1% over the course of a year and contributed 1.7 percentage points to growth. Household consumption expenditures grew by 2.7% and contributed 1.1 percentage points. Government consumption rose by 1.0%. Inventory drawdowns acted as a drag: the change in inventories subtracted 1.3 percentage points.
Industry and Trade Drive Value Added
Gross value added rose by 0.4% quarter-over-quarter. Manufacturing increased by 0.9%, financial services and insurance by 2.7%, and the real estate sector by 0.6%. Construction also grew, by 0.3%. Year-over-year, value added rose by 1.8%. Industry contributed 0.4 percentage points to this growth, the group comprising trade, transportation, lodging, and food services also contributed 0.4 percentage points, and information and communication contributed 0.3 percentage points.
“On the demand side, household final consumption expenditure, gross fixed capital formation, and foreign demand were the main drivers of growth compared with the previous quarter. Changes in inventories had a negative effect,” commented Vladimír Kermiet, Director of the National Accounts Department at ČSÚ.
Trade Surplus Shrinks
The balance of foreign trade in goods and services reached 99.0 billion Czech korunas, or about 4.1 billion euros. This was 20.5 billion korunas below the previous year’s figure. Exports rose by 3.3% in real terms, driven by motor vehicles, computers, electronic and optical equipment, and electrical equipment. Imports grew faster, by 3.7%.
Price pressures persist. The GDP deflator rose by 2.6% year-over-year. Labor costs climbed by 7.1%. Employment grew by 1.5%, and the number of hours worked increased by 2.8%.
For German machinery and plant manufacturers, one figure stands out above all: a 7.1% increase in capital expenditures. Czech companies are once again purchasing equipment—primarily vehicles—as well as residential and other buildings. Imports are growing faster than exports, and the trade surplus is shrinking. The market is thus absorbing more than it did last year. At the same time, labor costs are rising by 7.1%—faster than economic output. This makes local manufacturing more expensive and erodes the cost advantage that has driven many German companies to relocate to the Czech Republic.
Sources: Český statistický úřad, Flash Report “GDP Formation and Use – 2nd Quarter 2026,” August 28, 2026 (CS); Czech National Bank, foreign exchange rates as of August 31, 2026 (CS)
SK, Frankfurt