Czech consumer confidence remains robust despite a downturn in business sentiment and industrial activity, according to ING's latest economic analysis. While the Czech business confidence indicator fell 1.9 points in December to 98.0—below the long-term average—consumer confidence remained relatively bright at 111.1 points.
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David Havrlant, Chief Economist for ING Czech Republic, commented: "So far, the consumer has been more resilient than we have expected. We suspect that, without improvements in the industrial base, pressure here will inevitably build. With Czech industrial production stagnant since 2018, and real GDP gaining 10% since then, we must consider that something has been changing."
The decline in business confidence was driven by the services and manufacturing sectors, with manufacturing returning to levels seen in 2023–24. Construction was the only sector to record a gain in December. ING notes that the recent stabilisation in industry may be temporary, raising questions about the sustainability of the economy's growth if industrial recovery does not occur.
The report highlights the decoupling of real GDP growth from industrial output, signalling a gradual shift toward a service-oriented economy. Havrlant added: "We will soon determine whether there is sufficient room for the economy to continue its shift toward services, and when this potential will eventually be exhausted. With this in mind, it would be beneficial to create conditions that enable the industry to thrive again."
Despite challenges, ING remains cautiously optimistic. Government measures in Germany and the Czech Republic aim to support the industrial base, though uncertainties remain due to international competition, particularly from China.
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