November 2025 Business Confidence Report: Czech Republic
The latest business confidence reading for the Czech Republic, released on November 24, 2025, reveals a notable decline to 99.90, falling short of both the market estimate of 103.80 and last month’s 103.40. This drop signals a shift in sentiment among Czech firms amid evolving macroeconomic and geopolitical conditions. Drawing on data from the Sigmanomics database, this report compares recent trends with historical readings and assesses the broader economic implications for the Czech economy.
Table of Contents
The Czech Republic’s business confidence index has slipped to 99.90 in November 2025, marking a 3.50-point decline from October and a modest rise compared to the 12-month average of 99.10. This downturn interrupts a steady recovery trend observed since April 2025, when confidence bottomed at 96.50. The current figure remains below the 100-point neutral threshold, indicating cautious sentiment among firms.
Drivers this month
- Rising energy costs amid geopolitical tensions in Eastern Europe.
- Slower export growth due to weakening demand in key EU markets.
- Heightened uncertainty over monetary policy tightening by the Czech National Bank.
Policy pulse
The Czech National Bank’s recent rate hikes to combat inflation have tightened financial conditions, contributing to subdued business optimism. Inflation remains above the 3% target, pressuring firms’ cost structures and investment plans.
Market lens
Immediate reaction: The CZK/EUR currency pair strengthened by 0.30% within the first hour post-release, reflecting market anticipation of cautious corporate spending ahead. Short-term government bond yields edged up by 5 basis points, signaling increased risk premiums.
Core macroeconomic indicators provide context for the business confidence shift. GDP growth slowed to an annualized 2.10% in Q3 2025, down from 2.80% in Q2. Industrial production contracted by 0.40% MoM in October, while the unemployment rate held steady at 3.70%. Inflation remains sticky at 3.40% YoY, driven largely by energy and food prices.
Monetary Policy & Financial Conditions
The Czech National Bank has raised its policy rate by 50 basis points since September, pushing the benchmark to 4.25%. This tightening aims to anchor inflation expectations but has increased borrowing costs. Credit growth slowed to 3.20% YoY in October, down from 4.10% in July, reflecting tighter lending standards.
Fiscal Policy & Government Budget
The government’s fiscal stance remains moderately expansionary, with a 2025 budget deficit forecast at 2.80% of GDP. Increased spending on infrastructure and social programs supports domestic demand but raises concerns about medium-term debt sustainability.
External Shocks & Geopolitical Risks
Heightened geopolitical tensions in Eastern Europe, particularly the ongoing conflict near Ukraine’s borders, have disrupted supply chains and energy markets. Czech exports to Russia and Ukraine have declined by 6% YoY, while energy import costs surged 12% in Q3.
Historical comparisons show that the current reading is still above the low of 96.50 in April 2025 but below the 2024 average of 102.20, reflecting ongoing headwinds. The volatility in recent months suggests sensitivity to external shocks and domestic policy shifts.
This chart highlights a clear inflection point in November, with business confidence trending downward after a six-month recovery. The sharp decline signals rising caution among firms, likely due to cost pressures and uncertain demand outlooks.
Market lens
Immediate reaction: The 2-year Czech government bond yield rose by 7 basis points, while the CZK/USD pair appreciated 0.40%, reflecting risk-off sentiment and expectations of tighter monetary policy ahead.
Looking ahead, business confidence in the Czech Republic faces a mix of risks and opportunities. The baseline scenario projects a gradual recovery to 101-102 by Q1 2026 as inflation moderates and supply chains stabilize. However, downside risks include prolonged geopolitical tensions and further energy price shocks, which could push confidence below 98.
Scenario probabilities
- Bullish (25%): Inflation falls below 3%, monetary easing begins, and exports rebound, lifting confidence above 103.
- Base (50%): Inflation remains near target, moderate growth continues, and confidence stabilizes around 100-102.
- Bearish (25%): Geopolitical risks escalate, energy prices spike, and confidence dips below 98.
Structural & Long-Run Trends
Long-term trends such as digital transformation and green energy adoption continue to reshape the Czech economy. Firms investing in innovation may weather current headwinds better, supporting a gradual shift toward higher productivity and resilience.
The November 2025 business confidence reading of 99.90 signals a pause in the Czech Republic’s recovery momentum. While still above the yearly average, the decline reflects mounting pressures from inflation, monetary tightening, and geopolitical uncertainty. Policymakers face a delicate balancing act between controlling inflation and supporting growth. Market participants should monitor inflation trends, energy prices, and geopolitical developments closely to gauge the trajectory of business sentiment in coming months.
Key Markets Likely to React to Business Confidence
The Czech business confidence index strongly influences regional equity, currency, and bond markets. Key tradable symbols historically correlated with this indicator include:
- CEZ – Czech energy giant sensitive to domestic economic sentiment and energy price fluctuations.
- EURCZK – The euro to Czech koruna exchange rate reacts to shifts in business confidence and monetary policy expectations.
- PKN – Polish oil refiner impacted by regional economic trends and energy market volatility.
- BTCUSD – Bitcoin often moves inversely to risk sentiment, providing a hedge during economic uncertainty.
- USDCZK – The USD/CZK pair reflects broader risk appetite and monetary policy divergence.
Insight: Business Confidence vs. CEZ Stock Price Since 2020
| Year | Avg Business Confidence | CEZ Avg Stock Price (CZK) |
|---|---|---|
| 2020 | 95.30 | 550 |
| 2021 | 98.70 | 610 |
| 2022 | 100.20 | 630 |
| 2023 | 101.50 | 670 |
| 2024 | 102.20 | 690 |
| 2025 YTD | 100.50 | 660 |
Since 2020, CEZ stock prices have generally trended upward alongside improving business confidence, underscoring the sensitivity of energy sector equities to domestic economic sentiment.
FAQs
- What does the November 2025 Business Confidence reading indicate for the Czech economy?
- The 99.90 reading suggests cautious sentiment among firms, reflecting inflation pressures and geopolitical risks impacting growth prospects.
- How does business confidence affect monetary policy in the Czech Republic?
- Lower confidence may prompt the Czech National Bank to reconsider rate hikes, balancing inflation control with growth support.
- Why is business confidence important for investors?
- Business confidence signals firms’ outlook on demand and investment, influencing equity, currency, and bond market performance.
Takeaway: The November dip in Czech business confidence highlights rising economic caution amid inflation and geopolitical uncertainty, warranting close monitoring of policy and market responses.
CEZ – Czech energy giant sensitive to domestic economic sentiment and energy price fluctuations.
EURCZK – The euro to Czech koruna exchange rate reacts to shifts in business confidence and monetary policy expectations.
PKN – Polish oil refiner impacted by regional economic trends and energy market volatility.
BTCUSD – Bitcoin often moves inversely to risk sentiment, providing a hedge during economic uncertainty.
USDCZK – The USD/CZK pair reflects broader risk appetite and monetary policy divergence.
The November 2025 business confidence index of 99.90 contrasts with October’s 103.40 and the 12-month average of 99.10, indicating a reversal of the recent upward trend. The index peaked at 103.80 in May 2025 before fluctuating around 101-103 through the summer and early autumn.
This month’s 3.50-point drop is the largest single-month decline since April 2025, when the index fell 3.10 points from March’s 99.60 to 96.50.