The Czech economy has moved into the European spotlight after several difficult years marked by inflation and weak household spending.

According to new Eurostat data, Czechia now ranks among the fastest-growing economies on the continent, driven mainly by stronger domestic demand.

The turnaround has been gradual. Inflation has eased, real wages are rising again, and people are returning to normal spending habits. This renewed confidence is pushing household consumption up, while companies are increasing investment after months of caution.

Although exports remain slower, domestic demand has been strong enough to lift overall growth.

Czechia now sits in third place in Europe, behind only two countries. Spain, with growth of 2.8%, continues to benefit from a resilient tourism sector and a strong expansion of technology and service industries.

Close behind is Portugal, also at 2.4%, where higher real incomes are helping support steady consumer activity. Sweden is growing at the same pace, helped by rising household spending and gradually improving wages.

Further east, Lithuania is maintaining a 1.9% growth rate. Its economy started the year strongly but slowed slightly in the third quarter. Even so, higher wages have supported consumer confidence, keeping the trend stable. The Netherlands, growing at 1.6%, is seeing an uptick in investment—particularly in infrastructure and defense—while Belgium, at 1.1%, is recovering slowly as households increase spending.

Several smaller economies in the region are also showing signs of improvement. Estonia has returned to modest growth of 0.9% after last year’s downturn. Investment remains weak, but better consumption figures are preventing a repeat of last year’s decline. France reported the same 0.9% pace, although concerns about public debt and political uncertainty are limiting investment and external trade despite improving real wages.

Across Europe, the broader trend is one of cautious recovery. Households are beginning to feel the effects of easing inflation, and consumption is rising in most countries.

Investment and exports remain conservative, held back by global uncertainty and the high debt levels that some governments are struggling with. Southern Europe is benefitting from tourism and service industries, while central Europe—led by the Czech Republic—is stabilizing thanks to improved purchasing power and calmer inflation pressures.

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