Introduction to the Czech Republic’s Economy
The Czech Republic has become the country with the highest per capita production of cars in the world in the past thirty years. 2024 was a record year with more than 1.4 million vehicles in the country of 10 million inhabitants. This is an increase of almost 4% compared to the previous year. However, production dropped by 7.1% in the first quarter of 2025. The main reason for this was the decline in demand in the west, which was triggered by the problems in the European automotive industry, the slow transition to electromobility and the US tariffs.
The Rise of the Defense Industry
In the meantime, the country’s armor industry is booming. "The defense industry can become a new engine of the Czech and European economy," a member of the European Parliament’s Budget Committee said. "It can use the pension capacities and workforce released by the automotive sector, promote economic growth and at the same time strengthen our security." Around 90% of Czech weapons are exported and experts see that this trend continues.
Weapons as a New Economic Engine?
A Czech economist and advisor to the European Economic and Social Committee in Brussels is somewhat more skeptical. "Czech weapons factories experience golden times, that’s true," he said. However, he adds that he does not believe that weapons will replace the automotive sector as the new engine of the Czech economy. "I also don’t want weapons production to replace commercial production," he said. Even before the First World War, the territory of today’s Czech Republic was known as the center of weapons production.
History of the Defense Industry
For decades, Czechoslovakia at the time was also one of the world’s leading arms producers. For years, weapons have made up for around 10% of all Czechoslovak exports. The country’s strongly armed army also driven by the country’s strongly armed army by several hundred thousand men until the late 1980s. The end of the Warsaw Pact – a defense contract and a military alliance between the Soviet Union and seven other socialist republics of the eastern block, which were signed in 1955 – as well as the general disarmament in the early nineties, which was accompanied by a significant reduction in military budget, the manufacturers of Czech weapons met.
Ukrainian Growth Factor
After the invasion of Ukraine in Russia in February 2022, the Czech arms factories increased their production massively. In particular, the modernization of tanks and the production of ammunition, military vehicles, self-driving artillery haubs, drones, radar equipment and machine guns have been booming since then. 40% of the production of the Czech weapons factories go to Ukraine, where joint ventures were also set up. Overall, up to 90% of the Czech arms are exported. At the same time, the Czech army is also increasing.
New Jobs for Automotive Workers
The boom will continue in the next few years. This year, the ammunition manufacturer STV Group will increase the production of artillery ammunition with large-caliber, which it mainly delivers to Ukraine, from 100,000 units to 300,000. The Czech PBS group also plans to double their production of engines for rockets and drones. In return, the number of employees in these companies also grows. The STV Group plans to hire 1,000 other employees in the near future. Many of these employees will probably find new jobs in the defense business. According to the Czech recruitment agencies, you do not need any major retraining if you change the industry.
