The economic context of the Czech Republic

Main Sectors of Industry

The Czech agricultural sector went through a serious crisis in the 1990s and remains highly subsidised. Nowadays, it accounts for 2% of the country's GDP and employs 2.7% of the labour force (World Bank, 2025). Czechia has an agricultural area of 3.5 million ha and a forest area of 2.65 million ha (FAO). The main agricultural products are sugar beet, potatoes, wheat, barley and poultry. According to the Czech Statistical Office, in 2023, the agricultural industry's output fell by 7.9%, driven by a 17.4% drop in crop production, while animal production grew by 6.3%. Cereals (41.1%) and industrial crops (24.5%) dominated crop output, while milk (54.1%), pigs (14.7%), and cattle (12.5%) led animal production. Crop production (53.3%) remained higher than animal production (39.7%). Farmers' entrepreneurial income plunged by 58.0% compared to 2022. In 2024, pigmeat and poultry meat production rose after two years of decline, while beef production fell, though farms maintained production capacity. Exports of animals for slaughter increased.

Industry accounts for 28.7% of GDP and employs 34.9% of the labour force. Growth in performance has been accompanied by an increase in the productivity of the labour force. The automotive sector is by far the largest industry, with companies like Skoda (owned by Volkswagen). Since 2005, foreign investors such as Toyota and PSA have also started producing cars in the Czech Republic. The Czech automotive industry now employs more than 150,000 people and accounts for more than 20% of both Czech manufacturing output and Czech exports. The Czech electronics and electrical engineering sector accounts for more than 14% of total manufacturing output, which makes it the second-largest sector in the economy (over 17,000 companies employ more than 180,000 workers in the sector). Overall, the manufacturing industry contributes 19.4% of GDP. The Czech Republic is shifting from a manufacturing-heavy, export-driven economy to a more mature and diversified one. Key growth sectors like non-auto manufacturing, energy, and construction have slowed down due to falling productivity, rising energy costs, and weak demand. While the auto industry has remained resilient, the shift to electric vehicles and increasing foreign competition are expected to create significant challenges in the coming years. Industrial production dropped 1.4% in 2024, mainly due to weaker demand in mechanical and plant engineering and reduced output in metal manufacturing, processing, and machining—with both production and orders declining. Construction also fell by 2.4% compared to the previous year, per Czech Statistical Office data.

Services account for 60.8% of GDP and employ over 62% of the active population. The tourism sector recorded a pace of sustained growth in recent years, which was partially hampered by the COVID-19 pandemic. Nevertheless, Czechia welcomed about 22.8 million tourists in 2024, exceeding pre-pandemic levels for the first time. Overnight stays rose by 2.6% to 57.3 million nights, with a 3.8% year-on-year increase in the number of accommodated tourists. According to the CSO, both guest numbers and overnight stays surpassed 2019 figures for the first time since the COVID-19 outbreak. By the end of 2023, 46 licensed banks operated in Czechia, including four large, six medium-sized, seven small banks, 24 foreign bank branches, and five building societies. The sector's total assets rose by about 11% to CZK 9,890 billion (€400 billion), roughly 130% of GDP (data European Banking Federation, latest data available). Finally, the retail sector is also growing, with sales rising by 4.6% year-on-year in 2024 (CSO).

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