A decent first half for the economy

The first half of this year ended with a result that could be described as ‘decent, but far from decisive’. After many months of decline, the Czech manufacturing industry saw a symbolic improvement: the purchasing managers' index finally rose above the neutral 50 points. This in itself does not mean an industrial boom, but after three years of decline, it is information that gives the market reason to take a short breath. Production is starting to grow, orders are returning – at least domestic ones.

However, when we look across the border, the mood is not so encouraging. German industry – the engine of the European economy – continues to sputter and stutter. Foreign demand is falling, which is also affecting Czech exports. The entire Central European region is still caught in a cycle of uncertainty, where brief flashes of optimism are mixed with persistent structural problems: weak productivity, excessive bureaucracy and geopolitical tensions. The Strait of Hormuz, Iran, US tariff wars – all of these hang over the economy like a heavy cloud.

The domestic economy is currently drawing strength mainly from internal demand. Consumers have slowly started spending, and companies are cautiously planning investments. But the recovery is uneven – while some sectors are rebounding, others remain below the surface. Industrial companies are still laying off workers and shifting their workforce to the service sector. This is not a sign of healthy growth, but rather an adaptation to the changing rules of the game.

According to the final estimate, GDP grew by 0.7% quarter-on-quarter and 2.4% year-on-year in the first quarter, confirming the start of the recovery. We will have to wait another four weeks for the second quarter data, but the signals from industry and consumption so far indicate that growth is likely to continue.

The second half will start with mild optimism, but expectations remain realistic. Estimates point to 2% GDP growth in 2025 – no miracle, but no stagnation either. However, the battle for long-term recovery is far from over. If the economy is to truly breathe again, it will need more than just a slight improvement in statistics – above all, it will need confidence, stability and a clear direction.