Economic convergence vis-à-vis most advanced economies has slowed since the pandemic. Czechia has one of the lowest unemployment rates of the OECD, but employment rates of women with young children are very low. Moreover, productivity growth has slowed significantly since the global financial crisis and has stalled since the pandemic, leaving a sizeable productivity gap with the upper half of OECD countries.

Revitalising productivity growth will require boosting educational outcomes for all students, reducing skill shortages and mismatches, improving the innovation capacity through developing capital markets and better targeting business support for R&D, and fostering labour mobility. The tax system can also be made more growth-friendly.

GDP growth is projected to reach 2.4% in 2025, 2% in 2026 and 2.1% in 2027. Strong private consumption will remain the main growth driver. Investment is expected to rise, supported by Recovery and Resilience funds until the end of 2026. Export growth will be subdued in the near term due to trade restrictions but should strengthen as foreign demand—particularly from Germany—recovers. Risks to the outlook include escalating trade and geopolitical tensions, which could dampen growth, and more expansionary domestic fiscal policy, which may lead to higher inflation.

Monetary policy must remain vigilant amid uncertainty around trade and fiscal developments. Prudent fiscal policy is needed to build buffers for future shocks and address spending pressures from defence, population ageing and the green transition. Structural reforms—such as easing entry barriers in professional services and improving regulatory impact assessments—can enhance competition and productivity.

Czechia and Poland have experienced strong economic growth and significant improvements in living standards. Higher incomes and lower unemployment have put upward pressure on the demand for housing, while the supply has struggled to keep pace in many areas. The report analyses housing market trends in both countries and provides country-tailored recommendations to boost the supply of affordable housing and address the housing needs of vulnerable groups. The report presents strategies to unlock affordable housing development, including by facilitating the emergence of affordable housing providers, making more efficient use of spatial planning and land-based finance tools, and reforming property taxes. It also explores ways to adapt housing to meet the needs of an ageing population, mobilise existing buildings for affordable housing, and strengthen tailored housing solutions with integrated health and social services for people with higher support needs.