Recent data reveals a concerning downturn in industrial production in the Czech Republic, with a 0.4% decrease recorded over the past year. This decline, the most significant since 2020—largely impacted by Covid-19 restrictions—was particularly pronounced in energy-intensive sectors such as metallurgy and foundry work, despite a modest uptick in automotive production.

The downward trend in industrial output persisted through December, albeit at a slower rate, with a year-on-year decrease of 0.7% following a 2.7% decline in November. Notably, the performance of the industrial sector was marred by reductions in the production of non-metallic mineral products, primary metals, metallurgy, and foundry work.

Challenges in electricity production further compounded the overall decline, underscoring the pervasive nature of the downturn across various industrial segments. Despite a resurgence in motor vehicle and transport equipment production, reflected in a 16.1% increase, the broader industrial landscape continued to grapple with subdued demand and operational constraints.

While the value of new industrial orders experienced a modest 1.7% year-on-year decrease, revenues from industrial activity managed to register a four percent increase, indicative of resilient economic fundamentals amid challenging conditions.

The downturn in industrial production reverberated across multiple sectors, with notable declines observed in the production of non-metallic mineral products (down 17.8%) and primary metals, metallurgy, and foundry work (down 14.4%). However, there were pockets of growth, with the pharmaceutical industry recording a robust 9.3% increase in production.

Despite the challenging operating environment, there were silver linings in certain sectors, notably motor vehicles and other transport equipment, which showcased resilience amid broader market headwinds. However, the contraction in industrial output contributed to a 1.8% reduction in industry employment, even as average wages saw an 8.7% increase.

As the Czech Republic navigates the complexities of a fluctuating industrial landscape, policymakers and industry stakeholders face the imperative of fostering innovation, enhancing competitiveness, and bolstering resilience to mitigate the impact of external shocks and foster sustainable long-term growth.

Article by Prague Forum