Business Environment in the Czech Republic
The Czech Republic's economy is one of the most developed in Central and Eastern Europe. Its economic growth is strongly influenced by the demand on exports and foreign direct investment inflow. The country’s GNP growth which was increasing steadily over the past few years, experienced a strong drop in 2009 (-4.2%) due to the global recession. The growth rate became positive again in 2010, stimulated by exports which shows that the Czech Republic's economy is in full expansion and that its basis is becoming solid. The growth rate is estimated at 2% in 2010 and it should become stronger in 2011.
Inflation remained under control but the public funds decreased and the budgetary deficit became larger. In the context of the economic revival, the government has announced a program to reorganize its public finance for 2011. Severe measures have already been taken in order to reduce expenditures (suppression of subsidies, freeze salaries, etc.) and to increase the revenues. The objective is to bring the public deficit to 3% of the GDP by 2013, with the idea of meeting the Maastricht's requirements for the adoption of the Euro as its currency.
The unemployment rate increased under the effect of the global crisis and it remained stable at 8% of the active population.
|GDP (billions USD)||190.20||192.15||218.36||238.61||260.28|
|GDP (Constant Prices, Annual % Change)||-4.1||2.3||1.7e||2.9||2.9|
|GDP per Capita (USD)||18,171||18,288||20,738||22,610e||24,613e|
|General Government Balance (in % of GDP)||-4.2||-3.8e||-2.8||-3.0e||-3.2e|
|Inflation Rate (%)||1.0||1.5e||2.0||2.0||2.0|
|Unemployment Rate (% of the Labor Force)||6.7||7.3e||7.1e||6.9||6.5|
|Current Account (billions USD)||-1.94e||-3.40e||-5.07e||-6.28||-|
|Current Account (in % of GDP)||-1.0||-1.7e||-2.4||-2.7||-|
Source: IMF - World Economic Outlook Database
Note: (e) Estimated Data
Main Sectors of Industry
The agricultural sector went through a serious crisis in the 90s and, even today, it is still heavily subsidized. It generates approximately 2% of the country’s GNP and employs more than 3% of the active population. The main agricultural products are sugar beets, potatoes, wheat, barley and hops.
The production sector is mostly private, it accounts for almost 40% of the GNP and employs 40% of the active population. The growth at the level of performance was parallel to the increase in manpower's productivity. One of the main manufacturing sectors is the auto industry, with Skoda (Volkswagen company). Foreign investors such as Toyota and PSA also started producing cars in the Czech Republic since 2005. However, this sector has now reached a saturation point. Nearly 10,000 jobs were eliminated in 2009 because of the international crisis. The textile sector is becoming very dynamic.
Services contribute to 60% of the GDP and employ more than half of the active population. The tourism sector is booming, thanks to 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)||3.3||40.5||56.1|
|Value Added (in % of GDP)||2.3||37.2||60.5|
|Value Added (Annual % Change)||5.0||-13.1||1.5|
Source: World Bank - Last Available Data.
|Czech Crown (CZK) - Average Annual Exchange Rate For 1 USD||23.96||22.60||20.29||17.07||19.06|
Source: World Bank
Indicator of Economic Freedom
- Mostly free
- World Rank:
- Regional Rank:
Foreign Trade in Figures
The Czech Republic's economy is very open to foreign investment. Trade represented more than 145% of the GDP during the 2007-2008 period. Its membership to the European Union 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 the OECD countries (of which 80% is with EU countries). A certain number of agreements made it easier to trade with neighboring countries (CEFTA). The country has recorded a structural positive trade balance since it became a member of the European Union, a trend that should continue.
|Foreign Trade Indicators||2006||2007||2008||2009||2010|
|Imports of Goods (million USD)||93,191||118,169||142,038||105,048||126,185|
|Exports of Goods (million USD)||94,929||122,498||146,799||112,956||132,971|
|Imports of Services (million USD)||11,828||14,294||17,754||18,731||24,020|
|Exports of Services (million USD)||13,865||16,799||21,694||20,211||22,298|
|Imports of Goods and Services (Annual % Change)||14.3||14.3||4.7||-10.2||-|
|Exports of Goods and Services (Annual % Change)||15.8||15.0||6.0||-10.2||-|
|Imports of Goods and Services (in % of GDP)||73.0||75.1||72.5||63.8||-|
|Exports of Goods and Services (in % of GDP)||76.4||80.1||77.1||69.5||-|
|Trade Balance (million USD)||2,843||5,913||6,334||9,518||-|
|Trade Balance (Including Service) (million USD)||4,842||8,353||11,219||-||-|
|Foreign Trade (in % of GDP)||149.4||155.1||149.6||133.3||-|
Source: WTO - World Trade Organization ; World Bank
Main Partner Countries
(% of Exports)
|Other partnersClose extended list||42.3%|
(% of Imports)
|Other partnersClose extended list||46.3%|
Sources of General Economic Information
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
- Economic Portals
Czech Happenings, Czech Press Bureau (in Czech and in english)
Businessinfo.cz, Czech business web portal
Financni Noviny, News in English
- 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: Petr NECAS (since June 2010) – ODS
- Next Election Dates
- Presidential: February 2013
Chamber of Deputies: 2014
Indicator of Freedom of the Press
- World Rank:
- 5 places down compared to 2008
Indicator of Political Freedom
- Political Freedom:
- Civil Liberties:
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•All EU member states adopt common external trade policy and measures, which affect their trade relations with other countries.
Hong Kong Trade Development Council (HKTDC) on 30 Sep 2012 related to Business Environment in the Czech Republic
Thanks to the revival of exports and robust restocking, the Czech Republic resumed growth in the last two years (2.7% in 2010 and 1.7% in 2011).
Hong Kong Trade Development Council (HKTDC) on 30 Jul 2012 related to Business Environment in the Czech Republic
Thanks to the revival of exports and robust restocking, the Czech Republic resumed GDP growth of 2.3% in 2010, after a 4.1% decline in the recession year 2009.
Hong Kong Trade Development Council (HKTDC) on 27 Sep 2011 related to Business Environment in the Czech Republic
The Czech Republic has been one of the best performing economies in Central and Eastern Europe (CEE), with GDP growth resuming since the second quarter of 2009.
Hong Kong Trade Development Council (HKTDC) on 26 Apr 2011 related to Business Environment in the Czech Republic
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