Saturday, 29 August 2026
The Czech economy continued to expand during the second quarter of 2026, with stronger investment and household spending providing much of the momentum while construction, industry and real estate activities all contributed to the broader improvement.
Gross domestic product increased by 0.4% compared with the first quarter and by 1.9% year-on-year, according to the refined estimate published by the Czech Statistical Office on 28 August. The figures confirm continued economic growth, although the underlying components show considerable differences in performance.
Investment emerged as one of the strongest drivers. Gross fixed capital formation increased 1.5% quarter-on-quarter and 7.1% compared with Q2 2025. Spending on residential property, other buildings and structures, and transport equipment was among the areas contributing to the annual increase.
Fixed investment added an estimated 1.7 percentage points to annual GDP growth, making it a larger positive contributor than household consumption. For the property and construction sectors, this is particularly significant because the improvement is being accompanied by increased spending on physical assets rather than being driven exclusively by consumption or exports.
Construction also recorded modest growth during the quarter. Gross value added in the sector increased 0.3% from Q1, while real estate activities expanded by 0.6%. Industry performed more strongly, recording quarterly growth of 0.9%.
Industrial activity also contributed to the annual expansion. Industry increased 1.8% compared with Q2 2025, while trade, transport, accommodation and food services grew 2.4%. Information and communication recorded an annual increase of 4.1%.
Consumer demand provided another important source of growth. Household expenditure increased 0.5% quarter-on-quarter and 2.7% year-on-year, while government consumption was 0.1% higher than in Q1 and 1% above its level a year earlier. Overall final consumption increased 2.2% annually.
The improvement in household expenditure is relevant to the commercial property market because stronger consumption can provide a more supportive environment for retailers, shopping centres, retail parks, hospitality operators and other consumer-facing businesses. Household consumption contributed approximately 1.1 percentage points to annual GDP growth.
Foreign trade also remained supportive, although imports grew slightly faster than exports on an annual basis. Export volumes increased 0.9% from the previous quarter and 3.3% year-on-year, helped by motor vehicles, electronics and electrical equipment. Imports were unchanged quarter-on-quarter but increased 3.7% compared with Q2 2025.
The trade surplus in goods and services amounted to CZK 99 billion at current prices, although this was CZK 20.5 billion lower than a year earlier.
One of the main constraints on headline growth came from inventories. Changes in stocks reduced annual GDP growth by approximately 1.3 percentage points, offsetting part of the positive contribution from investment, household expenditure and trade. Inventories increased by CZK 17.6 billion during the quarter at current prices, but that was CZK 17.9 billion less than in the corresponding period of 2025.
Employment data also point to continued economic activity. Total employment increased 0.9% from the previous quarter and 1.5% year-on-year, while the total number of hours worked rose 0.7% quarterly and 2.8% annually. Labour costs increased 7.1% compared with the second quarter of last year.
Price pressures have not disappeared. The GDP deflator, a broad measure of price changes across the economy, increased 1% quarter-on-quarter and 2.6% year-on-year.
For the Czech property industry, the composition of Q2 growth is arguably more significant than the headline GDP figure. A 1.9% annual expansion remains moderate, but investment is growing substantially faster than the economy overall, with buildings and residential property among the areas contributing to the increase.
The simultaneous expansion of industry, construction and real estate activities also provides a more supportive backdrop for commercial property than an economic recovery concentrated in only one sector.
The figures nevertheless point to a gradual rather than dramatic Czech recovery. Inventory movements remain a sizeable drag, the nominal trade surplus has narrowed and labour costs continue to rise considerably faster than overall economic output.
The stronger investment numbers are therefore the most important signal for the property market. If the 7.1% annual increase in fixed investment proves sustainable, the Czech recovery could increasingly translate into demand for development, infrastructure and productive real estate rather than remaining primarily a statistical improvement in headline GDP.
