Czech Republic

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Economic and political outline

Economic indicators | Foreign Trade in figures | Sources of general economic information | Political outline

Economic indicators

The Czech Republic's economy is one of the most developed in Central and Eastern Europe. Its economic growth is strongly influenced by demand for exports and foreign direct investment inflow. The country’s GDP growth rate increased constantly over the past few years. However, a strong drop was recorded in 2009, with a negative GDP growth rate. Growth should increase again from 2010, a fact that shows the Czech economy's rapid growth and its strengthening foundations. Domestic demand will be a less dynamic economic growth driver and net trade will be less of a stimulus for growth because demand for euro zone imports will be slower, due to the unfavorable economic situation. Inflation remains under control but, public funds are progressively dwindling and the budgetary deficit is increasing. However, the government has committed itself to reducing the deficit in order to meet the Maastricht requirements for the adoption of the euro in the year 2010. In general, the Czech Republic has the means to weather the financial crisis because of its banking system which has been solid and stabilized since the 1990s and a strong currency.

Main indicators	2006	2007	2008	2009	2010
GDP (billions USD)	142.31	173.96	217.08e	172.29	173.95e
GDP (constant prices, annual % change)	6.8	6.0	3.2e	-3.5e	0.1
GDP per capita (USD)	13,864	16,856	21,027e	16,684e	16,840e
General government balance (in % of GDP)	-2.7	-1.0	-1.5e	-4.1	-4.2
Inflation rate (%)	2.5	2.9	6.3	1.0e	1.6e
Unemployment rate (% of the labor force)	7.1	5.3	4.2	5.5	5.7
Current Account (billions USD)	3.64	-5.48	-6.67	-4.67	5.17e
Current Account (in % of GDP)	-2.6	-3.2	-3.1e	-2.7	3.0

Source: IMF - World Economic Outlook Database

Note: (e) Estimated data

Main sectors of industry

The agricultural sector went through a serious of crisis in the 90s and is still heavily subsidized today. It generates approximately 3% of the country’s GDP and employs nearly 4% of the active population. The main agricultural products are sugar beets, potatoes, wheat, barley and hops.

The manufacturing sector constitutes about 40% of the country’s GDP and is mainly private. There was a performance growth in addition to an increase in labor productivity. One of the main manufacturing sectors is the car industry, with Skoda (Volkswagen company). Foreign investors such as Toyota and PSA also started producing cars in the Czech Republic in 2005. However, this sector has now reached saturation point. Nearly 10,000 jobs were cut in 2009 because of the international crisis. The textile sector is becoming very dynamic and the tourism sector is booming, because of the city of Prague in particular, which is a very attractive tourist center.

Breakdown of economic activity by sector	Agriculture	Industry	Services
Employment by sector (in % of total employment)	4.0	39.5	56.5
Value added (in % of GDP)	2.7	38.7	58.6
Value added (annual % change)	-13.8	9.8	7.6

Source: World Bank - last available data.

Monetary indicators	2004	2005	2006	2007	2008
Czech Crown (CZK) - Average annual exchange rate for 1 USD	25.70	23.96	22.60	20.29	17.07

Source: World Bank - World Development Indicators

Indicator of economic freedom

Score:: 69.4/100
Position:: moderately free
World Rank:: 37 out of 179
Regional Rank:: 20 out of 44

Distribution of Economic freedom in the world
Source: 2008 Index of Economic freedom, Heritage Foundation

Country risk

See the country risk analysis provided by Ducroire.

Foreign trade in figures

The Czech Republic’s membership of the EU has improved trade owing to the removal of customs and border controls. This has helped to improve the trade balance. Becoming a member has allowed the Czech Republic to enter into the common market and to consolidate its position as a low-cost production base. 80% of the country’s trade is now conducted with OECD countries (of which 80% is from EU countries). A number of agreements ease trade with neighboring states (CEFTA). The country recorded a positive trade balance in 2008, but should show a deficit in 2009 and 2010, especially because of the drop in orders from its trade partners (the automobile sector in particular). In effect, the financial crisis' impact on the different European Union countries has put commercial trade in a precarious position inside the European Union.

Foreign trade indicators	2004	2005	2006	2007	2008
Imports of goods (millions USD)	67,748	75,430	92,308	116,878	139,328
Exports of goods (millions USD)	67,220	77,951	95,151	122,791	145,697
Imports of services (millions USD)	9,008	10,217	11,883	14,397	17,379
Exports of services (millions USD)	9,643	11,765	13,941	17,180	22,230
Imports of goods and services (annual % change)	17.9	5.0	14.2	13.8	-
Exports of goods and services (annual % change)	20.7	11.6	15.8	14.6	-
Imports of goods and services (in % of GDP)	70.1	69.0	73.1	74.6	72.0
Exports of goods and services (in % of GDP)	70.1	72.2	76.6	79.6	77.0
Trade Balance (millions USD)	-529	2,522	2,843	5,913	6,368
Trade Balance (including service) (millions USD)	107	4,070	4,901	8,696	11,219
Foreign trade (in % of GDP)	140.2	141.2	149.7	154.2	149.0

Source: World Bank

Main partner countries

Main customers (% of exports)	2008
Germany	30.7%
Slovakia	9.2%
Poland	6.5%
France	5.4%
United Kingdom	4.8%
Austria	4.7%
Italy	4.7%
Netherlands	3.9%
Hungary	2.8%
Russia	2.7%
Belgium	2.7%
Spain	2.3%
Sweden	1.8%
United States	1.7%
Romania	1.5%
Switzerland	1.4%
Ukraine	1.0%
Denmark	0.8%
Finland	0.6%
Slovenia	0.6%
See more countries	43.4%

Main suppliers (% of imports)	2008
Germany	26.8%
China	8.8%
Russia	6.4%
Poland	5.8%
Slovakia	5.6%
Italy	4.5%
France	4.1%
Austria	3.7%
Japan	3.3%
Netherlands	3.1%
Hungary	2.7%
United Kingdom	2.4%
United States	2.1%
Belgium	1.9%
Spain	1.8%
Switzerland	1.1%
Azerbaijan	1.1%
South Korea	1.0%
Sweden	1.0%
Thailand	0.9%
See more countries	46.6%

Source: Comtrade

Main products

Main exports (% of exports)	2008
Nuclear reactors, boilers, machinery and...Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof	19.8%
Electrical machinery and equipment and parts...Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles	17.1%
Vehicles other than railway or tramway...Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof	15.8%
Articles of iron or steelArticles of iron or steel	4.9%
Iron and steelIron and steel	4.1%
Plastics and articles thereofPlastics and articles thereof	3.3%
Mineral fuels, mineral oils and products of their...Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes	3.0%
Furniture; bedding, mattresses, mattress supports,...Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings; lamps and lighting fittings, not elsewhere specified or included; illuminated signs, illuminated name-plates and the like; prefabricated buildings	2.4%
Rubber and articles thereofRubber and articles thereof	2.2%
Glass and glasswareGlass and glassware	1.5%
Optical, photographic, cinematographic, measuring,...Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof	1.4%
Paper and paperboard; articles of paper pulp, of...Paper and paperboard; articles of paper pulp, of paper or of paperboard	1.4%
Wood and articles of wood; wood charcoalWood and articles of wood; wood charcoal	1.3%
Toys, games and sports requisites; parts and...Toys, games and sports requisites; parts and accessories thereof	1.2%
Aluminium and articles thereofAluminium and articles thereof	1.1%
Printed books, newspapers, pictures and other...Printed books, newspapers, pictures and other products of the printing industry; manuscripts, typescripts and plans	0.9%
Pharmaceutical productsPharmaceutical products	0.9%
Miscellaneous articles of base metalMiscellaneous articles of base metal	0.8%
Organic chemicalsOrganic chemicals	0.8%
Railway or tramway locomotives, rolling-stock and...Railway or tramway locomotives, rolling-stock and parts thereof; railway or tramway track fixtures and fittings and parts thereof; mechanical (including electro-mechanical) traffic signalling equipment of all kinds	0.7%
Soap, organic surface-active agents, washing...Soap, organic surface-active agents, washing preparations, lubricating preparations, artificial waxes, prepared waxes, polishing or scouring preparations, candles and similar articles, modelling pastes, 'dental waxes' and dental preparations with a basis of plaster	0.6%
Articles of apparel and clothing accessories, not...Articles of apparel and clothing accessories, not knitted or crocheted	0.6%
Dairy produce; birds' eggs; natural honey; edible...Dairy produce; birds' eggs; natural honey; edible products of animal origin, not elsewhere specified or included	0.6%
Ceramic productsCeramic products	0.5%
Aircraft, spacecraft, and parts thereofAircraft, spacecraft, and parts thereof	0.5%
Tools, implements, cutlery, spoons and forks, of...Tools, implements, cutlery, spoons and forks, of base metal; parts thereof of base metal	0.4%
Articles of stone, plaster, cement, asbestos, mica...Articles of stone, plaster, cement, asbestos, mica or similar materials	0.4%
Copper and articles thereofCopper and articles thereof	0.4%
Beverages, spirits and vinegarBeverages, spirits and vinegar	0.4%
Inorganic chemicals; organic or inorganic...Inorganic chemicals; organic or inorganic compounds of precious metals, of rare-earth metals, of radioactive elements or of isotopes	0.4%
Miscellaneous edible preparationsMiscellaneous edible preparations	0.3%
Oil seeds and oleaginous fruits; miscellaneous...Oil seeds and oleaginous fruits; miscellaneous grains, seeds and fruit; industrial or medicinal plants; straw and fodder	0.3%
Other made-up textile articles; sets; worn...Other made-up textile articles; sets; worn clothing and worn textile articles; rags	0.3%
Articles of apparel and clothing accessories,...Articles of apparel and clothing accessories, knitted or crocheted	0.3%
Miscellaneous chemical productsMiscellaneous chemical products	0.3%
CerealsCereals	0.3%
Wadding, felt and nonwovens; special yarns; twine,...Wadding, felt and nonwovens; special yarns; twine, cordage, ropes and cables and articles thereof	0.3%
Tobacco and manufactured tobacco substitutesTobacco and manufactured tobacco substitutes	0.3%
Footwear, gaiters and the like; parts of such...Footwear, gaiters and the like; parts of such articles	0.3%
Essential oils and resinoids; perfumery, cosmetic...Essential oils and resinoids; perfumery, cosmetic or toilet preparations	0.3%
Tanning or dyeing extracts; tannins and their...Tanning or dyeing extracts; tannins and their derivatives; dyes, pigments and other colouring matter; paints and varnishes; putty and other mastics; inks	0.3%
CottonCotton	0.2%
Wool, fine or coarse animal hair; horsehair yarn...Wool, fine or coarse animal hair; horsehair yarn and woven fabric	0.2%
Man-made filamentsMan-made filaments	0.2%
Pulp of wood or of other fibrous cellulosic...Pulp of wood or of other fibrous cellulosic material; recovered (waste and scrap) paper or paperboard	0.2%
Sugars and sugar confectionerySugars and sugar confectionery	0.2%
Impregnated, coated, covered or laminated textile...Impregnated, coated, covered or laminated textile fabrics; textile articles of a kind suitable for industrial use	0.2%
Preparations of cereals, flour, starch or milk;...Preparations of cereals, flour, starch or milk; pastrycooks' products	0.2%
Miscellaneous manufactured articlesMiscellaneous manufactured articles	0.2%
Natural or cultured pearls, precious or...Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal, and articles thereof; imitation jewellery; coin	0.2%
Live animalsLive animals	0.2%
Residues and waste from the food industries;...Residues and waste from the food industries; prepared animal fodder	0.2%
Articles of leather; saddlery and harness; travel...Articles of leather; saddlery and harness; travel goods, handbags and similar containers; articles of animal gut (other than silkworm gut)	0.2%
Man-made staple fibresMan-made staple fibres	0.2%
Cocoa and cocoa preparationsCocoa and cocoa preparations	0.2%
Meat and edible meat offalMeat and edible meat offal	0.2%
Salt; sulphur; earths and stone; plastering...Salt; sulphur; earths and stone; plastering materials, lime and cement	0.2%
Animal or vegetable fats and oils and their...Animal or vegetable fats and oils and their cleavage products; prepared edible fats; animal or vegetable waxes	0.2%
FertilizersFertilizers	0.2%
Products of the milling industry; malt; starches;...Products of the milling industry; malt; starches; inulin; wheat gluten	0.1%
Arms and ammunition; parts and accessories thereofArms and ammunition; parts and accessories thereof	0.1%
Explosives; pyrotechnic products; matches;...Explosives; pyrotechnic products; matches; pyrophoric alloys; certain combustible preparations	0.1%
Preparations of meat, of fish or of crustaceans,...Preparations of meat, of fish or of crustaceans, molluscs or other aquatic invertebrates	0.1%
See more products	38.3%

Main imports (% of imports)	2008
Nuclear reactors, boilers, machinery and...Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof	16.8%
Electrical machinery and equipment and parts...Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles	15.7%
Mineral fuels, mineral oils and products of their...Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes	10.4%
Vehicles other than railway or tramway...Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof	8.5%
Iron and steelIron and steel	5.3%
Plastics and articles thereofPlastics and articles thereof	4.9%
Articles of iron or steelArticles of iron or steel	3.2%
Pharmaceutical productsPharmaceutical products	2.6%
Optical, photographic, cinematographic, measuring,...Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof	2.2%
Paper and paperboard; articles of paper pulp, of...Paper and paperboard; articles of paper pulp, of paper or of paperboard	1.7%
Rubber and articles thereofRubber and articles thereof	1.7%
Aluminium and articles thereofAluminium and articles thereof	1.7%
Furniture; bedding, mattresses, mattress supports,...Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings; lamps and lighting fittings, not elsewhere specified or included; illuminated signs, illuminated name-plates and the like; prefabricated buildings	1.3%
Copper and articles thereofCopper and articles thereof	1.0%
Miscellaneous chemical productsMiscellaneous chemical products	0.9%
Ores, slag and ashOres, slag and ash	0.8%
Toys, games and sports requisites; parts and...Toys, games and sports requisites; parts and accessories thereof	0.8%
Articles of apparel and clothing accessories, not...Articles of apparel and clothing accessories, not knitted or crocheted	0.7%
Organic chemicalsOrganic chemicals	0.7%
Printed books, newspapers, pictures and other...Printed books, newspapers, pictures and other products of the printing industry; manuscripts, typescripts and plans	0.7%
Miscellaneous articles of base metalMiscellaneous articles of base metal	0.7%
Wood and articles of wood; wood charcoalWood and articles of wood; wood charcoal	0.7%
Inorganic chemicals; organic or inorganic...Inorganic chemicals; organic or inorganic compounds of precious metals, of rare-earth metals, of radioactive elements or of isotopes	0.7%
Tanning or dyeing extracts; tannins and their...Tanning or dyeing extracts; tannins and their derivatives; dyes, pigments and other colouring matter; paints and varnishes; putty and other mastics; inks	0.6%
Glass and glasswareGlass and glassware	0.6%
Meat and edible meat offalMeat and edible meat offal	0.6%
Articles of apparel and clothing accessories,...Articles of apparel and clothing accessories, knitted or crocheted	0.6%
Tools, implements, cutlery, spoons and forks, of...Tools, implements, cutlery, spoons and forks, of base metal; parts thereof of base metal	0.5%
Footwear, gaiters and the like; parts of such...Footwear, gaiters and the like; parts of such articles	0.5%
Essential oils and resinoids; perfumery, cosmetic...Essential oils and resinoids; perfumery, cosmetic or toilet preparations	0.5%
Aircraft, spacecraft, and parts thereofAircraft, spacecraft, and parts thereof	0.5%
Edible fruit and nuts; peel of citrus fruits or...Edible fruit and nuts; peel of citrus fruits or melons	0.5%
Miscellaneous edible preparationsMiscellaneous edible preparations	0.4%
Dairy produce; birds' eggs; natural honey; edible...Dairy produce; birds' eggs; natural honey; edible products of animal origin, not elsewhere specified or included	0.4%
Soap, organic surface-active agents, washing...Soap, organic surface-active agents, washing preparations, lubricating preparations, artificial waxes, prepared waxes, polishing or scouring preparations, candles and similar articles, modelling pastes, 'dental waxes' and dental preparations with a basis of plaster	0.4%
Beverages, spirits and vinegarBeverages, spirits and vinegar	0.4%
Edible vegetables and certain roots and tubersEdible vegetables and certain roots and tubers	0.4%
Residues and waste from the food industries;...Residues and waste from the food industries; prepared animal fodder	0.4%
Preparations of cereals, flour, starch or milk;...Preparations of cereals, flour, starch or milk; pastrycooks' products	0.4%
Ceramic productsCeramic products	0.3%
Man-made filamentsMan-made filaments	0.3%
Articles of stone, plaster, cement, asbestos, mica...Articles of stone, plaster, cement, asbestos, mica or similar materials	0.3%
FertilizersFertilizers	0.3%
Articles of leather; saddlery and harness; travel...Articles of leather; saddlery and harness; travel goods, handbags and similar containers; articles of animal gut (other than silkworm gut)	0.3%
Impregnated, coated, covered or laminated textile...Impregnated, coated, covered or laminated textile fabrics; textile articles of a kind suitable for industrial use	0.3%
Railway or tramway locomotives, rolling-stock and...Railway or tramway locomotives, rolling-stock and parts thereof; railway or tramway track fixtures and fittings and parts thereof; mechanical (including electro-mechanical) traffic signalling equipment of all kinds	0.3%
Wadding, felt and nonwovens; special yarns; twine,...Wadding, felt and nonwovens; special yarns; twine, cordage, ropes and cables and articles thereof	0.3%
Preparations of vegetables, fruit, nuts or other...Preparations of vegetables, fruit, nuts or other parts of plants	0.3%
Cocoa and cocoa preparationsCocoa and cocoa preparations	0.2%
Salt; sulphur; earths and stone; plastering...Salt; sulphur; earths and stone; plastering materials, lime and cement	0.2%
Natural or cultured pearls, precious or...Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal, and articles thereof; imitation jewellery; coin	0.2%
Man-made staple fibresMan-made staple fibres	0.2%
Animal or vegetable fats and oils and their...Animal or vegetable fats and oils and their cleavage products; prepared edible fats; animal or vegetable waxes	0.2%
Other made-up textile articles; sets; worn...Other made-up textile articles; sets; worn clothing and worn textile articles; rags	0.2%
CottonCotton	0.2%
Wool, fine or coarse animal hair; horsehair yarn...Wool, fine or coarse animal hair; horsehair yarn and woven fabric	0.2%
Other base metals; cermets; articles thereofOther base metals; cermets; articles thereof	0.2%
Preparations of meat, of fish or of crustaceans,...Preparations of meat, of fish or of crustaceans, molluscs or other aquatic invertebrates	0.2%
Carpets and other textile floor coveringsCarpets and other textile floor coverings	0.2%
Raw hides and skins (other than furskins) and...Raw hides and skins (other than furskins) and leather	0.2%
Miscellaneous manufactured articlesMiscellaneous manufactured articles	0.2%
Sugars and sugar confectionerySugars and sugar confectionery	0.2%
Zinc and articles thereofZinc and articles thereof	0.1%
Tobacco and manufactured tobacco substitutesTobacco and manufactured tobacco substitutes	0.1%
Coffee, tea, maté and spicesCoffee, tea, maté and spices	0.1%
Lead and articles thereofLead and articles thereof	0.1%
Albuminoidal substances; modified starches; glues;...Albuminoidal substances; modified starches; glues; enzymes	0.1%
Live trees and other plants; bulbs, roots and the...Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage	0.1%
Nickel and articles thereofNickel and articles thereof	0.1%
Oil seeds and oleaginous fruits; miscellaneous...Oil seeds and oleaginous fruits; miscellaneous grains, seeds and fruit; industrial or medicinal plants; straw and fodder	0.1%
Pulp of wood or of other fibrous cellulosic...Pulp of wood or of other fibrous cellulosic material; recovered (waste and scrap) paper or paperboard	0.1%
CerealsCereals	0.1%
See more products	43.3%

Source: Comtrade

See more products: More imports (Intracen Data)
More exports (Intracen Data)

Sources of general economic information

Ministries: Ministry of Agriculture
Ministry of Foreign Affairs
Ministry of Industry and Trade
Ministry of Finance
Statistical Office: Czech National Statistical Office
Central Bank: Czech National Bank
Stock Exchange: Prague Stock Exchange
Czech capital market association
Search Engines: Atlas
Best
Katalog
O² Active
Superzoznam
Surf
Economic portals: Czech Happenings, Czech Press Bureau (in Czech and in english)
Businessinfo.cz, Czech business web portal
Financni Noviny, News in English

Political outline

Executive Power: President is the chief of the state and is elected by the parliament for a five-year term. President has limited specific powers, most important of them being power to return laws to the parliament and dissolving of the parliament under certain special conditions. President appoints the Prime Minister and the Cabinet on the recommendation of the Prime Minister. Prime Minister is the head of the government and also holds the executive powers which include implementation of the law in the country and running the day-to-day affairs. Prime Minister is generally the head of the majority party or coalition in the parliament and yields considerable political power.
Legislative Power: The legislature is bicameral. The parliament consists of: Senate (the upper house), its members elected by popular vote to serve six-year terms and the Chamber of Deputies (the lower house) with its members elected by popular vote to serve four-year terms. The executive branch of government is directly or indirectly dependent on the support of the parliament, often expressed through a vote of confidence Prime Minister cannot dissolve the parliament without taking President and the members of the parliament into confidence.
Main political parties: Czech Republic has a multi-party political system. The main political parties in the country are:
- CSSD (Czech Social Democratic Party) – defends a socially oriented state with a market economy;
- ODS (Civic Democratic Party) – a liberally conservative party, on the right of the political spectrum. It defends the principles of personal freedom and individual responsibility, entrepreneurship and private ownership;
- KSCM (Communist Party of Bohemia and Moravia) - heir of the Communist party of Czechoslovakia, though it has now modified its programme to suit country's new democratic politics;
- KDU-CSL (Christian Democratic Union-Czechoslovak People's Party) – a conservative political party which draws its main support from the Catholic rural areas in Moravia, in the center of the political spectrum ;
- Green Party (SZ) - highlights through its program the topic of ecology.
Current political leaders: President: Vaclav KLAUS (since March 2003) – ODS
Prime Minister: Jan FISCHER (since april 2009) – ODS
Next election dates: Presidential: February 2013
Chamber of Deputes: June 2010

Indicator of freedom of the press

World Rank:: 19/173
Evolution:: 5 places down compared to 2007

Source: Worldwide Press Freedom Index 2007, Reporters Without Borders

Indicator of political freedom

Ranking:: Free
Political freedom:: 1/7
Civil liberties:: 1/7

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