Detailed Review of the Czech Republic’s Economy
Although the Czech economy is one of the most powerful in the region its dependence on foreign commerce and international trade means that the 2008 crisis was particularly difficult for the country. It entered a recession in 2009 and growth remains low despite a slight rebound in 2010. The growth estimate for 2014 is 2.5%.
The Czech Republic’s industrial sector plays a significant role in the nation’s economy, representing 40% of GDP. It is primarily focused on textiles and the automotive industry, with the presence of Skoda, Toyota and Peugeot.
The services sector naturally plays the main role in the country’s development, employing more than half of the active population. The tourism sector is also expanding.
Finally, Czech agriculture is less influential, employing only 3% of the active population. It produces beets, potatoes, barley, wheat and hops. This branch of the economy is now heavily subsidized.
As discussed above, the country is open to the outside world, and trades extensively with foreign countries. This activity is supported by the country’s membership to the EU. Today, the Czech Republic has a positive trade balance.
The Czech Republic’s Economic Strengths
- Skilled, cheap labor.
- Access to the European market.
- Stable currency.
- Powerful central bank.
The Czech Republic’s Economic Weaknesses
- Dependence on external demand.
- Has not adopted the Euro.
- Sometimes turbulent political environment.
As with many countries in Eastern Europe, the Czech Government implemented measures to attract foreign investment including a programme for non-discrimination against foreign owned-companies.