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Czech Republic Economy

    Economy—overview: Political and financial crises in 1997 shattered the Czech Republic's image as one of the most stable and prosperous of post-Communist states. Delays in enterprise restructuring and failure to develop a well-functioning capital market played major roles in Czech economic troubles, which culminated in a currency crisis in May. The currency was forced out of its fluctuation band as investors worried that the current account deficit, which reached nearly 8% of GDP in 1996, would become unsustainable. After expending $3 billion in vain to support the currency, the central bank let it float. The growing current account imbalance reflected a surge in domestic demand and poor export performance, as wage increases outpaced productivity. The government was forced to introduce two austerity packages later in the spring which cut government spending by 2.5% of GDP. A tough 1998 budget continued the painful medicine. These problems were compounded in the summer of 1997 by unprecedented flooding which inundated much of the eastern part of the country. Czech difficulties contrast with earlier achievements of strong GDP growth, a balanced budget, and inflation and unemployment that were among the lowest in the region. The Czech economy's transition problems continue to be too much direct and indirect government influence on the privatized economy, the sometimes ineffective management of privatized firms, and a shortage of experienced financial analysts for the banking system. The country slipped into a mild recession in 1998, but hopes to rebound with 1% growth in 1999.

    GDP: purchasing power parity—$116.7 billion (1998 est.)

    GDP—real growth rate: -1.5% (1998 est.)

    GDP—per capita: purchasing power parity—$11,300 (1998 est.)

    GDP—composition by sector:
    agriculture: 5%
    industry: 33.8%
    services: 61.2% (1996)

    Population below poverty line: NA%

    Household income or consumption by percentage share:
    lowest 10%: 4.6%
    highest 10%: 23.5% (1993)

    Inflation rate (consumer prices): 10.7% (1998)

    Labor force: 3.655 million (1998)

    Labor force—by occupation: industry 33.1%, agriculture 6.9%, construction 9.1%, transport and communications 7.2%, services 43.7% (1994)

    Unemployment rate: 7% (1998 est.)

    revenues: $16.1 billion
    expenditures: $16.6 billion, including capital expenditures of $NA (1997)

    Industries: fuels, ferrous metallurgy, machinery and equipment, coal, motor vehicles, glass, armaments

    Industrial production growth rate: 6.7% (1998 est.)

    Electricity—production: 60.214 billion kWh (1996)

    Electricity—production by source:
    fossil fuel: 76.69%
    hydro: 3.04%
    nuclear: 20.27%
    other: 0% (1996)

    Electricity—consumption: 60.164 billion kWh (1996)

    Electricity—exports: 8.8 billion kWh (1996)

    Electricity—imports: 8.75 billion kWh (1996)

    Agriculture—products: grains, potatoes, sugar beets, hops, fruit; pigs, cattle, poultry; forest products

    Exports: $23.8 billion (f.o.b., 1998)

    Exports—commodities: manufactured goods 40.5%, machinery and transport equipment 37.7%, chemicals 8.8%, raw materials and fuel 7.8% (1997)

    Exports—partners: Germany 35.7%, Slovakia 12.9%, Austria 6.4%, Poland 5.7%, Russia 3.4%, Italy 3.3%, France 2.5% (1997)

    Imports: $26.8 billion (f.o.b., 1998)

    Imports—commodities: machinery and transport equipment 38.1%, manufactured goods 19.3%, raw materials and fuels 12.4%, chemicals 12.2%, and food 5.2% (1997)

    Imports—partners: Germany 26.6%, Slovakia 8.4%, Italy 5.3%, Austria 4.4%, FSU 3.4%, UK 3.4%, Poland 3.2% (1997)

    Debt—external: $21.6 billion (1997 est.)

    Economic aid—recipient: $351.6 million (1995)

    Currency: 1 koruna (Kc) = 100 haleru

    Exchange rates: koruny (Kcs) per US$1—30.214 (December 1998), 32.294 (1998), 31.698 (1997), 27.145 (1996), 26.541 (1995), 28.785 (1994)

    Fiscal year: calendar year

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Revised 1-Mar-99
Copyright © 1999 Photius Coutsoukis (all rights reserved)