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Czech Republic Economy
 
 
 

The Czech Republic possesses a developed, high-income economy with a GDP per capita of 82% of the European Union average. One of the most stable and prosperous of the post-Communist states, the Czech Republic has seen a growth of over 6% annually in the last three years. Recent growth has been led by exports to the European Union, especially Germany and foreign investment, while domestic demand is reviving.

Most of the economy has been privatised, including the banks and telecommunications. The current centre-right government plans to continue with privatisation, including the energy industry and the Prague airport. It has recently agreed to the sale of a 7% stake in the energy producer, CEZ Group, with the sale of the Budějovický Budvar brewery also mooted.

The country has fully implemented the Schengen Agreement and therefore, has abolished border controls, completely opening its borders with all of its neighbours, Germany, Austria, Poland and Slovakia, on December 21, 2007. The Czech Republic became a member of the World Trade Organisation.

The last Czech government led by social democrats had expressed a desire to adopt the euro in 2010, but the current centre-right government suspended that plan in 2007. An exact date has not been set up, but the Finance Ministry described adoption by 2012 as realistic, if public finance reform passes. However, the most recent draft of the euro adoption plan omits giving any date. Although the country is economically better positioned than other EU Members to adopt the euro, the change is not expected before 2013, due to political reluctance on the matter.

The principal industries in the Czech Republic 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 sugar beets, fodder roots, potatoes, wheat and hops.

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 is almost two times higher than the electricity consumption. South Moravia has a small amount of oil and gas deposits.

Overview

Economy - overview
The Czech Republic is one of the most stable and prosperous of the post-Communist states of Central and Eastern Europe. Maintaining an open investment climate has been a key element of the Czech Republic's transition from a communist, centrally planned economy to a functioning market economy. As a member of the European Union, with an advantageous location in the centre of Europe, a relatively low cost structure, and a well-qualified labour force, the Czech Republic is an attractive destination for foreign investment. Prior to its EU accession in 2004, the Czech government harmonised its laws and regulations with those of the European Union. The small, open, export-driven Czech economy grew by over 6% annually from 2005-2007 and by 2.3% in 2008. The conservative Czech financial system has remained relatively healthy throughout 2009. Nevertheless, the real economy contracted by 4.1% in 2009, mainly due to a significant drop in external demand as the Czech Republic's main export markets fell into recession.

GDP (purchasing power parity)
$256.6 billion (2009 est.)

GDP (official exchange rate)
$191.9 billion (2009 est.)

GDP - real growth rate
-4.1% (2009 est.)

GDP - per capita (PPP)
$25,100 (2009 est.)

GDP - composition by sector
agriculture: 2.8%
industry: 35%
services: 62.3% (2009 est.)

Labour force
5.38 million (2009 est.)


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