Czech Republic
Overview
The Czech Republic (known as Czechia) has shaken off its communist roots and embraced capitalism to become economically well-integrated with the rest of the European Union. Known for its breweries, the beautiful capital city of Prague, its castles and chateaux, it is also a hub for technology and innovation, and supports a strong video gaming industry. Cybersecurity software companies Avast and AVG were founded here, and many multinationals, including IBM software subsidiary Red Hat, have been attracted by the country’s skilled workforce, prime location, and stable track record of research and development innovation.
As well as being home to a population that is among the world’s most avid readers – and the most thirsty beer drinkers – this predominantly secular country is rated as one of the safest and most peaceful in the world. In the 2024 Global Peace Index, Czechia placed 12th of 163 countries. The index relies on 23 indicators across three domains: the level of societal safety and security; the extent of ongoing domestic and international conflict; and the degree of militarisation.
Czechia may also be in the running for the record of the most name changes, with nine in the 20th century alone. Notable people of Czech origin include Martina Navratalova, Ivana Trump and Madeleine Albright (born Marie Jana Körbelová).
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11.5hrs
Time Travel (From NY)
Average flight time from NY to the major cities in the country.
56
Partner Innovation capability
The score reflects investment in STEM progrms and IT funding by country.
69
Partner Skill Level
Level of workforce skills and quality of education, including factors such as digital literacy, interpersonal skills, etc.
66
Partner Global Competitiveness
National productivity based on 12 core pillars, including government policy, infrastructure, economic stability, etc.
Medium
Software Outsourcing Readiness
Overall rating, based on the maturity of the tech sector, socio-political conditions, and on-the-ground research by Accelerance.
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Talent Pool & Education
The Czech Republic is a leading source of freelance developers in Europe and has a highly skilled workforce. The sector benefits from government tax allowances and job creation subsidies. Software and IT companies are centered in four key hubs: Prague, Ololouc, Brno and Saabrucken. Microsoft’s office in the capital Prague has nearly 1000 employees and includes one of the company’s largest development centers in Europe.
Across the country, an increasing number of companies are adopting Software-as-a-Service (SaaS) models, a trend driven by the need for greater flexibility and scalability, as well as the lower upfront costs associated with cloud-based solutions.
Czechia boasts a thriving gaming industry. Popular video games such as the Mafia series, Beat Saber, Factorio, Kingdom Come: Deliverance, the Euro Truck Simulator, Day Z, ArmA and many more were developed by Czech game designers. Its overall education system is also strong. Czechia is ranked 18th of 173 countries in the education component of the United Nations' Human Development Index.
Language
The official language is Czech, but English is widely spoken, especially in business. A curious and little-known fact is that the language comprises more than 250,000 words – more than Russian, French or Arabic.
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Economic Outlook
Positive signs are emerging for the Czech economy related to the invasion of Ukraine and the legacy of the worldwide Covid pandemic. Slowing inflation and rising real wages are helping to lift household consumption while improving conditions in Europe, including declining interest rates, is expected to bolster external demand in the second half of 2024.
While GDP fell by 0.3% in 2023, Fitch is forecasting a return to growth in 2024. This is consistent with other forecasts that predict the economy will continue to track up in 2025. The Economist’s Intelligence Unit expects the government to improve relations with the European Union, while maintaining a pro-business orientation. Czechia has one of the lowest corporate tax rates in Europe, at 19%, and a rising share of highly skilled workers in the labor force.
However, with 80% of GDP accruing from exports, in particular automotive shipments, the economy is vulnerable to cyclical demand fluctuations. Additionally, the current tense geo-political context means the economy is particularly sensitive to global supply chain disruption and higher energy prices.
Political Conditions
The country is ruled by a five-party center-right majority coalition led by Prime Minister Petr Fiala. Despite significant ideological differences, the government is expected to see out its term until the next election in October 2025.
The Russian invasion of Ukraine, which saw the Czech Republic adopt a stronger pro-Western foreign policy orientation, and subdued household spending in the face of record-high inflation, has hindered the government's fiscal consolidation. However, a subsequent considerable fall in inflation, together with a small increase in wages, has led a return to modest growth.
A general swing to the right in European Parliamentary elections in June 2024 was reflected in the Czech Republic, where the right-wing populist opposition party, the ANO, secured the largest share of votes with 26%. The Spolu (Together) coalition, including the Civic Democrats, Christian Democrats, and Top 09, which currently governs the country, came a close second with 22.2% of the vote. Commenting on the trend, Czech president Petr Pavel said: “We cannot ignore the rise in support for extremists in Europe. We need to perceive these voices and think about why this is happening.”