AGP Executive Report

Ukraine Trade: Czech exports to Ukraine are growing, and companies are pursuing reconstruction work, including shelter construction, despite limited expectations of a near-term ceasefire. Air Links: Starlux has increased Taipei–Prague service to four flights a week, bringing the two countries’ combined nonstop services to seven weekly; the airline reported an 82% load factor in August and sees scope for investment ties, including in semiconductors. Labour Market: Czech employers face a shortage of more than 90,000 workers, prompting plans to expand recruitment quotas, particularly for workers from the Philippines. Costs and Markets: Prague shares recorded their strongest weekly gain since April as CSG stock surged, while producer-price inflation reached its highest level since April 2023. Czechia also joined calls for more flexibility on EU carbon costs as energy prices divide European leaders. Business Risk: Insurers estimate drought could cost the Czech economy up to CZK 50 billion.

Labour Market: Czechia faces a shortage of more than 90,000 workers, prompting plans to expand recruitment quotas for Filipinos. Companies in industry, construction, logistics, transport and services say current hiring routes are too slow. Energy Costs: At the EU summit, Czechia joined countries pressing for more flexibility in carbon pricing as energy bills squeeze businesses and households; leaders left major changes unresolved. Politics: Prime Minister Andrej Babiš’s ANO party won no seats in the Senate run-offs, while opposition parties strengthened their majority—a setback that is unlikely to threaten the governing coalition. Markets and Industry: Prague stocks posted their strongest weekly gain since April, helped by a surge in CSG shares. Czech arms companies have also invested CZK 55 billion in the US, supporting 5,000 jobs. Prices: Czechia recorded the EU’s fourth-lowest consumer inflation in September, even as producer-price inflation reached its highest level since April 2023.

Markets: Prague stocks posted their strongest weekly gain since April, led by defence group CSG shares. CSG also bought a 9.5% stake in Canadian space company MDA for $434 million. Politics and Energy Costs: Prime Minister Andrej Babiš’s ANO party won no seats in Senate run-offs, leaving the opposition majority intact. The result is not expected to threaten the coalition, but comes as Czechia pushes to delay the EU’s expanded carbon market; leaders instead agreed to review its impact as energy costs divide the bloc. Industry: Škoda Group explored rail modernisation and signalling opportunities in India, and metro and rail projects in Azerbaijan. Prices: Czech inflation rose to 2.5% in September, still the EU’s fourth-lowest rate, while producer-price inflation reached its highest level since April 2023. Mortgage lending also increased in September as interest rates rose.

Markets: Prague stocks posted their strongest weekly gain since April, climbing back above 2,600 points as CSG shares surged, though trading remained subdued. Energy Costs: Czechia joined calls at the EU summit to delay the new carbon market for transport and heating as leaders sought ways to ease high energy costs. Economic Outlook: The IMF cut its 2026 growth forecast for Czechia to 1.8%. September inflation was 2.5%, the EU’s fourth-lowest rate, while producer-price inflation reached its highest level since April 2023. Czech company bankruptcies also hit their highest nine-month total since 2016. Industrial Investment: German supplier Grammer has started production at its new Cheb seating plant, while Czech arms group CSG bought a 9.5% stake in Canadian space company MDA Space for $434 million.

Prices: Czech producer-price inflation reached its highest level since April 2023, while consumer inflation remained the EU’s fourth-lowest despite a September rise. Factory Investment: Grammer Jifeng opened a CZK 1 billion plant in Cheb, making seats for BMW’s electric iX1. Growth and Risks: The IMF cut its 2026 Czech growth forecast to 1.8%, and company bankruptcies hit their highest nine-month total since 2016. Logistics: DHL plans to invest more than $447 million in Central and Eastern Europe by 2030, including the Czech market. Czech Capital Abroad: Defence group CSG bought a 9.5% stake in Canada’s MDA Space for $434 million, extending its reach into the space sector. Carbon Costs: Czechia and other V4 states are pressing the EU to delay ETS2, warning the carbon charges could add to transport and housing costs.

EU Energy Costs: Leaders agreed to review the carbon market and asked the Commission to consider short-term action on high energy prices. Czechia backed the push for change, but a proposed delay to new carbon charges was dropped. EU Budget: Prime Minister Andrej Babiš objected to borrowing €89 billion for Ukraine through the bloc’s 2028–2034 budget, saying Czechia would not guarantee the funds. Defence Industry: Czech arms companies have invested CZK 55 billion in the US and employ more than 5,000 people across 12 states, Defence Minister Jaromír Zůna said. International Expansion: Škoda Group is pursuing rail and technology partnerships in India and Azerbaijan, targeting opportunities in modernisation, signalling and local industrial cooperation. Prague Airport: Moody’s reaffirmed operator Letiště Praha’s Aa3 rating with a stable outlook, supporting plans for long-term investment. Business Climate: Czech company bankruptcies reached their highest nine-month total since 2016. Climate Risk: A severe drought could cost the economy up to CZK 50 billion, insurers estimate.

EU Energy Costs: Czechia and its Visegrád partners are pressing to delay the EU’s ETS2 carbon market until at least 2030, as leaders struggle to agree on action to curb high energy prices. AI Investment: Cohere has signed a letter of intent to buy Prague-linked cybersecurity startup Aisle and says it plans a substantial long-term investment in the city. Clean Power: Enery has commissioned a 36.7 MWp solar plant in Czechia. Business Conditions: Czech company bankruptcies hit their highest nine-month total since 2016. Climate Risk: Insurers estimate drought could cost the Czech economy up to CZK 50 billion. India Ties: Czech and Indian organisations have agreed to explore joint research and technology projects, while Maharashtra invited Czech companies to invest in manufacturing, technology and defence.

AI and Cybersecurity: Cohere has signed a letter of intent to buy AISLE, adding software vulnerability detection and a Prague engineering hub to its growing European business. Prague Housing: RSJ and Na Jelenách plan a CZK 50 billion district with 5,500 rental flats for up to 16,000 residents; construction could begin in 2027. Trade and Industry: Czech and Azerbaijani officials discussed expanding transport and logistics cooperation, while Deputy PM Karel Havlíček met India’s BEML to explore partnerships in engineering, machinery and transport technology. Czech Investment: Defence group CSG bought a 9.5% stake in Canada’s MDA Space for $434 million, expanding into the space sector. Startups and Growth: Czech hotel-tech company FLÆ Robotics raised more than €1 million to expand its AI guest-services platform. The IMF has cut its 2026 Czech growth forecast to 1.8%, while September inflation rose to 2.5%.

Corporate Expansion: Czech defence group CSG has bought a 9.5% stake in Canada’s MDA Space for $434 million, marking a major move into the space sector. Startups: Tomáš Čupr’s Duvo raised $32 million in a Series A to expand its AI automation platform, while Czech hotel-services startup FLÆ Robotics secured more than €1 million. Economic Outlook: The IMF cut its 2026 Czech growth forecast to 1.8%. September inflation rose to 2.5%, while mortgage lending increased despite higher rates. EU Funds: Transparency International says the European Commission has flagged a potential conflict of interest involving Prime Minister Andrej Babiš and Agrofert, warning that EU payments could be suspended. Trade Ties: Czechia and India agreed to deepen defence cooperation, with Deputy PM Karel Havlíček also discussing investment opportunities with Karnataka officials.

Prices and Credit: Czech inflation accelerated to 2.5% in September, driven in part by fuel costs, while mortgage lending reached CZK 35.4 billion and the average new-loan rate edged up to 5.1%. Fuel Regulation: Senators have asked the Constitutional Court to overturn a law allowing the government to cap fuel prices, warning that prolonged caps could squeeze smaller retailers. Corporate Expansion: Czech defence group CSG bought a 9.5% stake in Canadian space company MDA Space for $434 million, making it the company’s largest shareholder. Growth Outlook: The IMF cut its forecast for Czech economic growth in 2026 to 1.8%. Trade and Travel: Czech and Indian officials discussed expanding trade, investment and joint manufacturing, while Vietjet launched a twice-weekly Hanoi–Almaty–Prague service. Commercial Property: Ecologistics leased the entire 44,500-square-metre larger hall at EQT Park Prague North.

Space Investment: Czech defence group CSG bought a 9.5% stake in Canada’s MDA Space for about $434 million, becoming its largest shareholder and exploring satellite production facilities in Europe. Economic Outlook: Czech inflation rose to 2.5% in September, while the IMF cut its 2026 growth forecast to 1.8%. Trade and Industry: During a visit to India, Deputy PM Karel Havlíček discussed expanding trade, investment and joint manufacturing, including defence and advanced technology cooperation. Logistics: Ecologistics leased the entire 44,500-square-metre larger hall at EQT Park Prague North, reportedly in record time. Regional Trade: Czech-Azerbaijani business talks focused on transport and freight links, with bilateral trade turnover reported at $760 million this year and Czech investment in Azerbaijan at $74 million.

Space Industry: Czech defence group CSG has bought a 9.5% stake in Canada’s MDA Space, becoming its largest shareholder and opening the door to potential joint manufacturing in Europe. Logistics: Ecologistics has leased the entire 44,500-square-metre hall at EQT Park Prague North for e-commerce operations, with about 100 jobs expected. Economic Outlook: The IMF cut its Czech growth forecast to 1.8% for 2026 and 1.9% for 2027, below the Finance Ministry’s projection for next year. India Ties: Prague and New Delhi are pursuing deeper defence-industry links and exploring aircraft production in India; Czech officials also see the EU-India trade deal as a boost for joint ventures and investment. Competition: The European Commission has opened an in-depth probe into XXXLutz’s proposed takeover of Porta, citing concerns about furniture retail competition in Czechia, Germany and Slovakia. Data Security: A flaw in a test version of the Czech business registry exposed personal identification numbers, prompting the Justice Ministry to take the platform offline.

India Trade: Czech industry minister Karel Havlíček said the proposed India-EU free-trade deal could open the door to Czech joint ventures and investment in engineering, energy, construction and transport. Azerbaijan Links: Czechia and Azerbaijan are seeking closer business and transport ties, including cooperation on metro and tram projects and the Middle Corridor. Czech investment in Azerbaijan totals about $74 million, while bilateral trade turnover reached $760 million this year. Transport Projects: A Ferrovial-Strabag team won the Czech Republic’s largest transport public-private partnership contract. Workforce: The government wants to speed up foreign-worker hiring as employers face labor shortages; a survey also points to slower pay rises as hiring becomes easier. Air Links: Vietjet has launched its first European route, connecting Prague and Hanoi twice weekly via Almaty, opening a new link with a market that includes nearly 70,000 Vietnamese residents in Czechia.

Transport Investment: A Ferrovial–Strabag consortium has signed a 28-year, roughly €2.9 billion PPP for the D35 motorway in eastern Czechia, including 35.4km of new road, two tunnels and maintenance of an existing section. Trade and Logistics: Czechia and Azerbaijan are seeking closer business ties, with bilateral trade at about $760 million in January–August, up 7.7% year on year. Transit cargo rose 47% in 2025, while Czech investment in Azerbaijan has reached $74 million; transport, rail, logistics and urban mobility are among the sectors targeted for cooperation. Automotive Industry: Volkswagen CEO Oliver Blume called the carmaker’s overhaul a shared responsibility between industry and policymakers, backing “Made in Europe” rules as European manufacturers face pressure from Chinese EV rivals.

Energy and Industry: Prime Minister Andrej Babiš called a US-Russia oil deal a “massive slap in the face” for Europe and urged an EU response, as energy security remains a concern. Prague Politics: STAN came first in the capital’s municipal election, while the Pirates lost ground. New councils will shape public investment and where housing can be built. Prague’s decision to scrap taxi fare caps has also drawn warnings that unchecked prices could hurt the city’s reputation with visitors. Trade Links: Vietjet has launched twice-weekly Prague–Hanoi flights via Almaty, a new connection expected to support tourism, business travel and trade. Auto Sector: Volkswagen CEO Oliver Blume says the company’s restructuring depends on both business competitiveness and EU policy support, as Chinese rivals intensify pressure on Europe’s carmakers.

Energy & Europe: Prime Minister Andrej Babiš called a Trump-Putin agreement on Russian oil supplies a “massive slap in the face” for Europe and urged the EU to respond. Politics: The opposition scored early gains in Czech Senate elections, with at least four first-round victories, in a key test of support for Babiš’s government. EU Budget: Czech MEP Danuše Nerudová joined colleagues in rejecting an Irish proposal for an 8% cut to the next EU budget, warning it would weaken support for competitiveness, defence and regions. Economic pulse: Czech industrial growth eased and the trade balance turned to deficit; retail sales growth also slowed to 4.3%. Mortgage rates rose to 5.79%, adding pressure for borrowers. Investment: Teplárny Brno opened a modernised biomass power station, while a preferred bidder was named for a €2.9 billion Czech motorway project. A Czech-US memorandum also aims to boost business cooperation.