Economy of the Czech Republic
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| Economy of the Czech Republic | ||
|---|---|---|
| Currency | 1 Czech koruna (Kč) | |
| Fiscal year | calendar year | |
| Trade organizations | EU, WTO and OECD | |
| Statistics | ||
| GDP ranking | 39th by nominal volume; 39th by nominal volume per capita; 41st by volume adjusted for PPP; 36th per capita adjusted for PPP (2004) | |
| GDP PPP | $225.5 billion (2006) | |
| GDP growth rate | 6.4% (2006) | |
| GDP per capita | $22,000 (2005 est.) | |
| GDP by sector | agriculture (3.4%), industry (39.3%), services (57.3%) (2004) | |
| Inflation rate | 7.1% (March 2008) | |
| Pop below poverty line | N/A | |
| Labour force | 5.25m (2004) | |
| Labour force by occupation | services (58.7%), industry (37.6%), agriculture (3.7%) (2006) | |
| Unemployment | 4.3%[1] | |
| Main industries | motor vehicles and parts, machine tools, electric power equipment, metals, chemicals, coal, food processing, glass, beverages, tourism | |
| Trading partners | ||
| Exports | $66.5bn (2004) | |
| Main partners | Germany 36.1%, Slovakia 8.4%, Austria 6%, Poland 5.3%, UK 4.7%, France 4.7%, Italy 4.3%, Netherlands 4.3% (2004) | |
| Imports | $68.2bn (2004) | |
| Main partners | Germany 31.7%, Slovakia 5.4%, Italy 5.3%, People's Republic of China 5.2%, Poland 4.8%, France 4.8%, Russia 4.1% (2004) | |
| Public finances | ||
| Public debt | 33.1% of GDP (2005) | |
| External debt | $43.2bn ( 30 June 2005 est.) | |
| Revenues | $48.16bn (2005 est.) | |
| Expenses | $53.04bn (2005 est.) | |
| Economic aid | $2.4bn from EU funds (2004-06) | |
Of the emerging democracies in central and eastern Europe, the Czech Republic has one of the most developed industrialized economies. It is one of the most stable and prosperous of the post-Communist states of Central and Eastern Europe.
The principal industries are heavy and general machine-building, iron and steel production, metalworking, chemical production, electronics, transportation equipment, textiles, glass, brewing, china, ceramics, and pharmaceuticals. Its main agricultural products are sugarbeets, fodder roots, potatoes, wheat, and hops.
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[edit] History
- Further information: Economy of Czechoslovakia
Its strong industrial tradition dates to the 19th century, when Bohemia and Moravia were the economic heartland of the Austro-Hungarian Empire. Today, this heritage is both an asset and a liability. The Czech Republic has a well-educated population and a well-developed infrastructure, but its industrial plants and much of its industrial equipment are obsolete.
According to the Stalinist development policy of planned interdependence, all the economies of the socialist countries were linked tightly with that of the Soviet Union. With the disintegration of the communist economic alliance in 1991, Czech manufacturers lost their traditional markets among former communist countries to the east.
[edit] 1990-1995
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The "Velvet Revolution" in 1989 offered a chance for profound and sustained economic reform. Signs of economic resurgence began to appear in the wake of the shock therapy that the International Monetary Fund (IMF) labelled the "big bang" of January 1991. Since then, astute economic management has led to the liberalization of 95% of all price controls, annual inflation in the 10% range, modest budget deficits, low unemployment, a positive balance of payments position, a stable exchange rate, a shift of exports from former communist economic bloc markets to Western Europe, and relatively low foreign debt.
Particularly impressive have been the republic's strict fiscal policies. Following a series of currency devaluations, the crown has remained stable in relation to the U.S. dollar. The Czech crown became fully convertible for most business purposes in late 1995.
In addition, the government has revamped the legal and administrative structure governing investment in order to stimulate the economy and attract foreign partners. Shifting emphasis from the East to the West has necessitated restructuring existing facilities in banking and telecommunications as well as adjusting commercial laws and practices to fit Western standards. The republic has made progress toward creating a stable investment climate.
This success has enabled the Czech Republic to become the first post-communist country to receive an investment-grade credit rating by international credit institutions. Successive Czech governments have welcomed U.S. investment, in particular, as a counter-balance to the strong economic influence of Western Europe, especially of their powerful neighbour, Germany. Although foreign direct investment (FDI) runs in uneven cycles, with a 12.9% share of total FDI between 1990 and March 1998, the U.S. was the third-largest foreign investor in the Czech economy, behind Germany and the Netherlands.
The republic boasts a flourishing consumer production sector and has privatized most state-owned heavy industries through the voucher privatization system. Under the system, every citizen was given the opportunity to buy, for a moderate price, a book of vouchers that represents potential shares in any state-owned company. The voucher holders could then invest their vouchers, infusing the chosen company with valuable capital. State ownership of businesses was estimated to be about 97% under communism. In 1998, more than 80% of enterprises are in private hands. When the voucher privatization process is complete, Czechs will own shares of each of the Czech companies, making them one of the highest per capita share owners in the world. Privatization through restitution of real estate to the former owners was largely completed in 1992.
[edit] 1995-2000
The republic's economic transformation is far from complete. A recession in 1998 revealed that the government still faces serious challenges in completing industrial restructuring, increasing transparency in capital market transactions, fully privatizing the banking sector, transforming the housing sector, privatizing the health care system, and solving serious environmental problems.
Political and financial crises in 1997 shattered the Czech Republic's image as one of the most stable and prosperous of post-Communist states. Delays in enterprise restructuring and failure to develop a well-functioning capital market played major roles in Czech economic troubles, which culminated in a currency crisis in May. The currency was forced out of its fluctuation band as investors worried that the current account deficit, which reached nearly 8% of GDP to introduce two austerity packages later in the spring (called vernacularly "The Packages"), which cut government spending by 2.5% of GDP. Growth dropped to 0.3% in 1997, -2.3% in 1998, and -0.5% in 1999. The basic transition problem continues to be too much direct and indirect government influence on the privatized economy. The government established a restructuring agency in 1999 and launched a revitalization program - to spur the sale of firms to foreign companies. Key priorities include accelerating legislative convergence with EU norms, restructuring enterprises, and privatizing banks and utilities. The economy, fuelled by increased export growth and investment, is expected to recover in 2000.
[edit] 2000-2005
Growth in 2000-05 was supported by exports to the EU, primarily to Germany, and a strong recovery of foreign and domestic investment. Domestic demand is playing an ever more important role in underpinning growth as interest rates drop and the availability of credit cards and mortgages increases. Current account deficits of around 5% of GDP are beginning to decline as demand for Czech products in the European Union increases. Inflation is under control. Recent accession to the EU gives further impetus and direction to structural reform. In early 2004 the government passed increases in the Value Added Tax (VAT) and tightened eligibility for social benefits with the intention to bring the public finance gap down to 4% of GDP by 2006, but more difficult pension and healthcare reforms will have to wait until after the next elections. Privatization of the state-owned telecommunications firm Český Telecom took place in 2005. Intensified restructuring among large enterprises, improvements in the financial sector, and effective use of available EU funds should strengthen output growth.
[edit] Energy
The Czech Republic is reducing its dependence on highly polluting low-grade brown coal as a source of energy.. Nuclear energy presently provides about 30% of total power needs, and its share is projected to increase to 40%. Natural gas is procured from Russian Gazprom (roughly three-fourths of domestic consumption) and from Norwegian companies (most of the remaining one-fourth). Russian gas is imported via Ukraine (Friendship pipeline), Norwegian gas is transported through Germany. The gas consumption (approx. 100 TWh in 2003-5) is almost two times higher than the electricity consumption. South Moravia has a small oil and gas deposits.
[edit] Statistical indicators
From the CIA World Factbook 2006
Household income or consumption by percentage share: (1996)
- lowest 10%: 4.3%
- highest 10%: 22.4%
Industrial production growth rate: 11% (2004)
Electricity - production: 78.18 GWh (2003)
Electricity - production by source:
- fossil fuel: 75.54%
- hydro: 2.55%
- nuclear: 20.37%
- other: 1.54% (1998)
Electricity - consumption: 56.5 GWh (2003)
Electricity - exports: 26.3 GWh (2003)
Electricity - imports: 10.1 GWh (2003)
Oil - production: 12,380 bbl/day (2003)
Oil - consumption: 185,200 bbl/day (2003 est.)
Oil - exports: 26,670 bbl/day (2001)
Oil - imports: 192,300 bbl/day (2001)
Oil - proved reserves: 17.25 million bbl (1 January 2002)
Natural gas - production: 133 million m³ (2003 est.)
Natural gas - consumption: 9.623 billion m³ (2003 est.)
Natural gas - exports: 1 million m³ (2001 est.)
Natural gas - imports: 9.521 billion m³ (2001 est.)
Natural gas - proved reserves: 3.964 billion m³ (1 January 2002)
Natural resources: coal, timber, lignite, uranium, magnesite.
Agriculture - products: wheat, rye, oats, corn, barley, potatoes, sugar beets, hops, fruit; pigs, cattle, poultry, horses; forest products
Exports - commodities: machinery and transport equipment 52%, chemicals 5%, raw materials and fuel 9% (2003)
Imports - commodities: machinery and transport equipment 46%, raw materials and fuels 15%, chemicals 10% (2003)
Exchange rates: koruny (Kč) per US$1 - 18.277 (December 2007) 23.957 (2005), 25.7 (2004), 28.2 (2003), 32.7 (2002), 38.0 (2001), 38.6 (2001), 34.6 (1999), 32.3 (1998), 31.7 (1997), 27.1 (1996), 26.5 (1995)
[edit] See also
[edit] Resources
- Statistická ročenka České republiky (Statistical Yearbook of the Czech Republic) by the Czech Statistical Office. The current line is published annually since 1957. Recent yearbooks can be read online (in Czech and English).
- Czechoslovakia published its first statistical yearbook in 1920. Historically used names: Statistická příručka Republiky československé, Statistická ročenka Protektorátu Čechy a Morava (during the occupation) and Statistická ročenka Československé socialistické republiky.
- Statistics about the Czech lands in Austria-Hungary were collected by Zemský statistický úřad Království českého (Provincial Statistical Office of the Czech Kingdom) founded in 1897. Two detailed books (in Czech and German) were published in 1909 and 1913.
[edit] External links
- OECD Economic Survey of the Czech Republic
- OECD's Czech Republic country Web site
- Doing business in Czech Republic
- Current economic data
- Economy: Development and potential
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