Czech Republic overview

Share this page:
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 2022 2.5%

EBRD forecast for the Czech Republic's real GDP growth in 2023 3.5%

After a solid, broad-based 3.3 per cent GDP growth in 2021, the Czech economy faces headwinds in 2022 related to a combination of the war on Ukraine and related disruptions, and to ongoing inflation pressures. In April 2022, the Czech National Bank raised its two-week repo rate to a 20-year high of 5 per cent to help counter rising inflation, while the government has cut excise taxes and has expanded social benefits. While the economy was running hot before the war, and low unemployment should help in absorbing Ukrainian refugees into the labour market, the Czech economy is also exposed to war-related risks. The energy-intensive industry sector is dependent on imports of Russian gas, with limited external alternatives. Manufacturing, especially the car industry and its exports, will likely further suffer from higher energy prices, trade and supply disruptions, with some car plants already limiting their production. GDP growth is anticipated to slow down in 2022 reaching 2.5 per cent, before recovering to 3.5 per cent in 2023.

Share this page: