Czech households saw modest income growth in 2024 amid declining savings and lower corporate profits

In 2024, household income in the Czech Republic rose by 1.5% in real terms compared to the previous year, according to data from the Czech Statistical Office. Real consumption per capita grew at a slightly faster rate of 2.4% year-on-year. At the same time, the household saving rate fell by 0.9 percentage points to 18.8%.

The average monthly income from employment reached CZK 49,067 in 2024, marking a 3.3% increase in real terms compared to 2023.

Despite the rise in household income and consumption, investment by households declined slightly. The household investment rate dropped by 0.3 percentage points to 10.8%.

Q4 2024 Developments

During the fourth quarter of 2024, household income per capita grew by 1.8% year-on-year and by 0.1% compared to the previous quarter. Real consumption rose 3.4% year-on-year and 1.5% quarter-on-quarter. The average monthly income from employment increased to CZK 52,363, up 3.9% year-on-year in real terms.

However, the household saving rate decreased to 18.3% in Q4, falling 1.3 percentage points year-on-year. The household investment rate also declined slightly to 10.7%.

Corporate Sector: Lower Profit and Investment Rates

Non-financial corporations experienced a drop in profitability in 2024. The annual profit rate fell by 1.6 percentage points to 45.4%, though it remained above the EU average of approximately 40%. Labour costs in the sector rose by 6.2% year-on-year.

The corporate investment rate also declined by 1.1 percentage points to 26.5%. Despite these declines, nominal profit levels increased.

In the fourth quarter alone, the profit rate was 44.3%, down 3.0 percentage points year-on-year. Investment activity remained flat quarter-on-quarter, holding at 26.9%, but declined compared to Q4 2023.

External Sector: High Outflow of Profits

Foreign owners of Czech corporations collected profits equivalent to 6.9% of GDP in 2024, totalling CZK 553 billion. Of this, more than CZK 360 billion was distributed as dividends, while over CZK 192 billion was reinvested.

According to Vladimír Kermiet, Director of the National Accounts Department at CZSO, these outflows were partially offset by inflows from employment income and subsidies from abroad. Nonetheless, the balance of primary income from abroad worsened by CZK 238 billion year-on-year, resulting in a deficit of CZK 348 billion.

National Economy: Mild GDP Growth

The inclusion of updated government sector data led to a refined GDP estimate. The Czech economy expanded by 0.7% quarter-on-quarter in Q4 2024 and by 1.8% compared to the same period in 2023.

For the full year, GDP grew by 1.0% in real terms. However, gross national income declined by 0.8% and gross disposable income for the entire economy dropped by 0.9%, reflecting the deteriorated balance of income from abroad.