Economy of Czech Republic

By | April 29, 2022

According to cheeroutdoor, the Czech Republic is an industrialized country, it accounts for approx. 1% of world industrial output. The volume of GDP in 2001 at current prices was $56.4 million, or $5,305 per capita, and $14,042 at purchasing power parity. The private sector produces 79.8% of GDP. In 2001, the Czech Republic overcame the transformational recession after the transition to a market economy and reached 102.6% of GDP compared to 1989. The main factor in economic growth in recent years has been the growth of investment in fixed assets, stimulated by the inflow of foreign direct investment into the Czech economy. During the years of transformation, the Czech Republic lagged behind the economically developed EU countries: if at the start of the economic reform in 1989, the GDP per capita in the Czech Republic was 70% of the average level of the EU countries, then in 2002 it was approx. 60%.

In the sectoral structure of the economy, there is a trend towards an increase in the share of services in GDP due to a decrease in the share of the primary sector (agriculture, mining) and the secondary sector (industry and construction). In the structure of GDP, the share of industry is 32.9%, construction – 7.1%, trade and hotel services – 16.3%, transport and communications – 7.4%, monetary and insurance services – 4.3%, other market services – 13.1%, non-market services – 16.0%. An important place in the country’s economy is occupied by the sector of small and medium-sized businesses, which employs 60% of the workforce and creates 53% of GDP (47% in manufacturing industries). Inflation dropped from 11.3% in 1993-98 to 2.1% in 2002. Unemployment is on the rise. 2002 9.7%.

In the industry, which employs approx. 1/3 of the number of people employed in the national economy, 36.6% of the gross value added is created. The electrical, automotive and machine-building industries are developing at a faster pace. Despite this, the Czech industry is still not sufficiently competitive in foreign markets, especially in high-tech industries (8.8% in export value).

The main industries are mechanical engineering, electrical engineering, the production of means of transport (28% of gross value added), the production of electricity, water and gas (14%), metalworking (12%), food (11%), oil refining, chemical, pharmaceutical, rubber and manufacturing plastics (10%), production of building materials, glass, ceramics and porcelain (7%), woodworking, pulp and paper and printing (6%), light (5%), mining (4%), other industries ( 3%).

The competitiveness of the Czech economy is largely determined by the manufacturing industry, which accounts for 80% of export value. On the international market, the Czech Republic occupies the position of a traditional exporter of engineering products: power equipment for nuclear power plants, investment complexes, turbines, turbogenerators, compressors, machine tools, cars, buses, tractors. One of the most dynamic sectors of the Czech industry, thanks to large infusions of foreign capital, is the automotive industry, which employs 5.4% of the employed in the national economy and produces 9.2% of gross value added. Škoda Auto, part of the Volkswagen Group, is the largest Czech exporter, accounting for 7% of total exports.

Electricity generation 73,466 million kWh, 78% from thermal power plants, 2% from hydroelectric power plants and 20% from nuclear power plants. 14,855 thousand tons of black coal and 50,307 thousand tons of brown coal are mined.

4278 thousand hectares, or 54.3% of the country’s territory, is occupied by agricultural land, including arable land – 3142 thousand hectares, meadows – 6520 thousand, pastures – 272 thousand, vineyards – 16 thousand, hops – 10 thousand ha. The land market has been liberalized, a 7-year moratorium has been introduced on the sale of agricultural land to non-residents.

The number of agricultural workers decreased from 553 thousand in 1990 to 175 thousand in 2000. 3.2% of GDP is created in agriculture, which employs 3.7% of all employed in the national economy. One agricultural worker feeds 41 people in the Czech Republic. (in Poland – 17, in Hungary – 38, in Slovakia – 30, in Germany – 80, in Belgium – 108 people).

During 1989-2001, gross agricultural output decreased by more than 30%, including crop production – by 23%, livestock – by 36%. In the structure of gross agricultural output, the ratio of livestock and crop production has changed: from 59 and 41% in 1989 to 54.6 and 45.4% in 2000.

54.5% of the sown areas are occupied by grain crops. Grain yield 44 c/ha, incl. wheat – 42 centners / ha, potatoes – 213 centners / ha, sugar beet – 458 centners / ha. Grain production per 1 ha of agricultural land 1527 kg, potatoes 345 kg, sugar beet 656 kg.

The main branches of animal husbandry are pig and poultry farming. There are 1,582,000 cattle, including 611,000 cows, 3,594,000 pigs, and 32,043,000 poultry. PCS. eggs. The average milk yield per cow is 5255 liters, the average egg production of chickens is 277 pcs. eggs per year.

Dense network of railways: the operational length of railways is 16.8 thousand km (120 km per 1000 km2). In 2000, 98 million tons of cargo and 174 million passengers were transported by railways. Railway transport needs technical re-equipment. Only 7% of the railway network allows speeds from 120 to 160 km/h. The length of motor roads is 122 thousand km (703 km per 1000 km2). In 2000, 61 million tons of cargo and 603 million passengers were transported by road. The length of inland navigable waterways is 603.8 km; in 2000, 1.9 million tons of cargo were transported along them. Vehicle fleet (personal, trucks and buses) 4.2 million units Airlines connect Ch. with 39 countries of the world. The aircraft fleet, one of the youngest in the world, consists of 30 aircraft, the average age of which does not exceed 7 years.

High level of telephonization in the country: 80 per 100 inhabitants; mobile phones 42 per 100 inhabitants. The number of mobile phone users is 2.3 million people, the Internet is 440 thousand people.

The share of retail and wholesale trade in GDP is 14.4%, in employment 18%. Domestic trade generally meets world standards. The indicator of equipping the population with retail space is 0.7-0.9 m2 per 1 inhabitant.

The Czech Republic is one of the world’s tourist centers. Every year more than 104.2 million foreign tourists visit the country, 38.2 million Czech citizens go abroad. Tourism revenues are approximately $2.6 billion.

There are 38 credit institutions on the Czech banking market, of which foreign capital controls 16 banks and 10 branches of foreign banks, Czech shareholders control 9 banks (5 of them are subsidiaries of Czech banks owned by foreign shareholders), 3 banks are dominated by the state own. The state retained control of two specialized banks – the Czech Export Bank for supporting export financing and insurance, and the Czech Moravian Guarantee and Development Bank for financing programs to support small and medium-sized enterprises. Foreign capital controls approx. 95% of total banking assets. High level of capital concentration: the three largest banks (Czechoslovak Commercial Bank, Commercial Bank and Savings Bank) accumulate 60% of total banking assets. The indicator “capital-assets” – 15.5%. The share of risk-weighted loans is 19.6% of total loans. The volume of deposits is 70.2% of GDP, the volume of loans is 47.5% of GDP.

The Czech National Bank is the central bank of the state, maintains state budget accounts, determines monetary policy, and exercises banking supervision. The bank manager and members of the banking council are appointed and dismissed by the president of the Czech Republic for a six-year term. The main goal of the Czech National Bank is to ensure price stability. Foreign exchange reserves $22.6 billion (2002).

The deepening state budget deficit (the negative balance of the consolidated budget in 2002 was 6.6% of GDP) is based on the high costs of clearing the banking sector of “bad” loans and restructuring the sphere of enterprises and credit organizations, as well as the growth of the so-called. mandatory, and above all social, expenditures, which account for 43.4% of total budget expenditures.

The tax reform is going in the direction of reducing the tax burden on individuals and legal entities, increasing tax revenues to regional budgets, and simplifying the system of taxation of small businesses. Since January 1, 2001, the tax rate on income of legal entities is 31% (45% in 1993), on income of individuals 15-32%.

Gross external debt 23.8 billion US dollars, or 36.7% of GDP, including short-term debt 42% (2002). Structure of long-term external debt: banking sector 19%, government 7%, enterprises 74%. Domestic debt (excluding government guarantees and the debt of transformational institutions) increased by more than 2.3 times compared to 1993 and amounted to 100,000 rubles. 2001 23.6% of GDP.

The average monthly wage is $514, the minimum wage is approx. $190, or 40% of the average wage (2002). The minimum wage exceeds the subsistence minimum, which is reviewed every six months based on the dynamics of inflation and wages.

The Czech Republic is characterized by a high level of consumption of basic foodstuffs per capita, comparable to economically developed countries: meat – 79.4 kg, fat – 25.3 kg, milk and dairy products – 214 l, eggs – 275 pieces, grain – 104.7 kg, sugar – 36.1 kg, potatoes – 77 kg, vegetables – 82.4 kg, fruits – 75 kg, alcoholic beverages – 184.3 l, soft drinks – 206.0 l. There are 120 TV sets, 150 refrigerators, 110 automatic washing machines, 70 cars per 100 families.

The structure of household expenditures: food and non-alcoholic beverages – 23%, alcoholic beverages and tobacco products – 3, clothing and footwear – 6.1, housing, water, energy, fuel – 18.7, household equipment – 6.6, medical services – 1.9, transport – 11.7, communications and telecommunications – 3.9, recreation, culture and sports – 10.3, education – 0.6, hotel complex and catering services – 5.3, other services – 8.9%.

After the initial stage of the transition to a market economy, when the unemployment rate was low, due to the delayed restructuring of the economy in recent years, its growth has been observed: from 5.2% in 1997 to 10% in the beginning. 2003. The number of unemployed reached 500 thousand people. The share of long-term unemployed is growing, which is 38.7% of the total number of unemployed in the country. Significant regional disparities in unemployment rates persist. Young people aged 20–29 are at the greatest risk in the labor market, accounting for 36.8% of the total number of registered unemployed.

The Czech Republic is a country with a small highly open economy (the share of foreign trade is approximately 145% of GDP). The volume of exports in current prices in 2001 amounted to 33.4 billion US dollars, imports – 36.5 billion US dollars. 69% of exports and 62% of imports of the Czech Republic come from EU countries. In territorial terms, the leading foreign trade partner of the Czech Republic is Germany, which accounts for 40.7% of Czech exports and 32.5% of imports. Considering the high openness of the Czech economy, such a one-sided orientation of foreign trade increases the dependence of the Czech economy on the economic situation in Germany.

The main export items are machinery and vehicles (44.5% of the value of exports), semi-finished raw materials and chemical products (39.1%), industrial consumer goods (12.6%), agricultural and food products (3.8%) . In imports, the leading positions are occupied by raw materials and chemical products (44.5%), machinery and vehicles (40.2%), industrial consumer goods (10.4%), agricultural and food products (4.9%). Imports are covered by exports by 90%.

Convenient geographical location with access to both EU and Eastern markets, high qualification potential and relatively low labor costs, incentive system for foreign investors create a favorable investment climate. The total volume of foreign direct investment invested in the Czech economy, 27.8 billion US dollars (1990-2001). The Czech Republic ranks first in the region of Central and Eastern Europe in terms of foreign direct investment per capita – 2244 US dollars. Distribution of foreign direct investment by individual sectors of the economy: service sector 60%, manufacturing sector 38%, extractive industries, agriculture and forestry 2% of the total volume of foreign investment. The main volume of foreign direct investment comes to the Czech Republic from the EU countries – 84%.

Economy of Czech Republic