The Czech Republic's economy is grappling with stagnant productivity levels and demographic issues, as indicated by revised long-term GDP growth forecasts of 2% for the next decade, down from 2.9% between 2000 and 2019. This stagnation is largely due to a lack of productivity growth since 2019, resulting in output per hour worked remaining effectively unchanged.
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While labour supply has driven GDP growth, significantly aided by the integration of around 400,000 Ukrainian refugees and increased participation rates, this reliance on labor is not sustainable. Demographic challenges, including low fertility rates and an ageing population, are anticipated to impede future economic growth.
Although sectors such as ICT and high-end manufacturing show some promise, these advancements have yet to produce broad-based economic improvements. Moreover, the government’s industrial strategy acknowledges key challenges but is criticized for insufficient funding and prioritizing other areas, raising concerns about effective implementation.
Further details are available in the report.