Czech Republic overview

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City in Czech Republic

The European Bank for Reconstruction and Development will resume investment in the Czech Republic after the Bank’s Board of Directors approved a request by its government to help with the recovery from the coronavirus pandemic.

Our re-engagement will be temporary and not exceed a period of up to five years. It will be limited in scope and focus on the private sector. It will complement support provided by the European Investment Bank and the European Union (EU).

A joint assessment by the EBRD and the Czech government has identified as areas of engagement the provision of direct and private equity to strengthen companies that have suffered revenue losses as a result of the pandemic and those that have found new growth opportunities.

The Bank will invest venture capital to support innovative, high-growth local small and medium-sized enterprises that have limited access to finance. Further development of the local capital market will also facilitate the financing of the real economy.

The green energy transition remains a high priority of the Czech Republic’s agenda. The intensity of the energy sector is nearly twice the EU average and the country is one of the largest greenhouse gas emitters in Europe, with 75 per cent of its heating produced from coal. The EBRD can offer its know-how in strengthening the regulatory environment for renewable energy and support energy efficiency investments with dedicated credit lines to address these challenges.

The EBRD originally stopped investing in the Czech Republic at the end of 2007 following the country’s request to graduate from being a recipient of the Bank’s funds.

However, the Czech Republic always remained a shareholder of the EBRD and the Bank continued to manage its portfolio there and supported Czech companies in other EBRD countries of operations.

The new approach will be reviewed in 2024.

The EBRD’s latest strategy for the Czech Republic was adopted on 15 September 2021.

EBRD forecast for the Czech Republic's real GDP growth in 2021 3.4%

EBRD forecast for the Czech Republic's real GDP growth in 2022 4.6%

The Czech Republic was one of the most affected economies in the CEB region in 2020, as GDP fell by 5.8 per cent in a broad-based recession. Economic activity was also modest in the first half of 2021, as GDP expanded by just 3 per cent year-on-year. Containment measures led to another quarterly decline in private consumption in the first quarter of 2021, but it rebounded strongly once restrictions were eased in the second quarter. Investment had similar dynamics as it recovered by only 0.9 per cent in the first half of 2021. After a strong performance in the second half of 2020, exports again declined in the first quarter of 2021 as the EU economy went through another wave of infections. Moreover, imports grew by a stronger 4.9 per cent quarter-on-quarter in the second quarter of 2021.

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