The Facts About The Czech Republic And Its Strengthening Economy | GDP
The Czech Republic economy is one of wealthiest and stablest in Post-Soviet Europe and the CEE. It is one of the most developed industrialised economies, with a GDP per captia that currently stands at 19,200 EUR in 2013, which is 85 per cent of the EU average. Its population of 10.5 million inhabitants boasts a well-educated workforce –72 per cent being within employable age of 15 to 64 years –and well-developed infrastructure. In 2012, it registered unemployment at 7.4 per cent, the seventh lowest of the 27 EU member states.
Joining the European Union in 2004, the Czech Republic economy is closely integrated with the EU. Prospects for EUR adoption in the country remain uncertain following the economic crisis but the government is looking to align itself more closely to the currency. Domestic foreign indebtedness remains relatively low despite a general trend over the last 10 years toward rising budget deficits, mostly due to conservative policy emerging following the first economic crisis in the 90s. Economic growth is strongly influenced by export demand for and flows of foreign direct investment (FDI), particularly to Germany, while country remains open to international trade, particularly to the US. This also makes the country particularly sensitive to the performance of its main exports and in 2012, the economy fell into another recession, due both to a slump in external demand and the government’s austerity measures, following the GEC. Yet, the country recovered by the second half of 2013 with an expected modest, but steady, growth through 2014.
While the automotive industry is the Czech Republic’s largest industry, other key sectors in the region include machinery, iron and steel production, metallurgy, chemical production, electronics, transport equipment, textiles, glass, ceramics, defence and pharmaceuticals. However, as the automotive industry experiences a downturn in demand, the country has been focussing on diversifying away from manufacturing and toward a more high-tech, services-based, knowledge economy. Telecommunications has been privatised, along with the competitive and resilient banking sector that is mostly foreign owned, while the Czech Republic is the first post-communist country to receive an investment-grade credit rating by international credit institutions.
When looking at doing business in the Czech Republic, opportunity exists in energy, with the government looking toward reducing its dependence on highly polluting low-grade brown coal. There are investment incentives available for developing natural alternatives as a source, not only to reduce the country’s dependence on imports from Russia via the Ukraine, but also to continue to support economic growth. South Moravia has some small oil and gas deposits, while Nuclear is being further developed, it’s share of national energy production currently standing at 30 per cent of the country’s total power needs and set to increase to a projected 40 per cent.
Tax increases and budget cuts have yielded surpluses in recent years, and government spending has stabilised at 43 per cent of the GDP, while public debt is around 45 percent of the domestic economy. Here are some other facts from the index for people looking to do business in the Czech Republic economy: property rights are relatively well protected, and contracts are generally secure, while incorporating a business has become less time-consuming, and licensing requirements have eased. The minimum capital requirement is now less than 30 percent of the level of average annual income, while labour regulations are relatively flexible. EU members have a low 1.1 percent average tariff rate and few non-tariff barriers, while restrictions on foreign land ownership have been phased out, along with any existing reservations that the Czech Republic is the place to do business in the CEE.