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Czech Republic Economy 1996
The government of the Czech Republic, using successful stabilization
policies to bolster its claims to full membership in the western economic
community, has reduced inflation to 10%, kept unemployment at 3%, balanced
the budget, run trade surpluses, and reoriented exports to the EU since the
breakup of the Czechoslovak federation on 1 January 1993. GDP grew 2% in
1994 after stagnating in 1993 and contracting nearly 20% since 1990.
Prague's mass privatization program, including its innovative distribution
of ownership shares to Czech citizens via 'coupon vouchers,' has made the
most rapid progress in Eastern Europe. When coupon shares are distributed in
early 1995, 75%-80% of the economy will be in private hands or partially
privatized, according to the Czech government. Privatized companies still
face major problems in restructuring; the number of annual bankruptcies
quadrupled in 1994. In September 1994, Prague repaid $471 million in IMF
loans five years ahead of schedule, making the Czech Republic the first East
European country to pay off all IMF debts. Despite these outlays,
hard-currency reserves in the banking system totaled more than $8.5 billion
in October. Standard & Poor's boosted the Republic's credit rating to BBB+
in mid-1994 - up from a BBB rating that was already two steps higher than
Hungary's and one step above Greece's rating. Prague forecasts a balanced
budget, at least 3% GDP growth, 5% unemployment, and single-digit inflation
for 1995. Inflationary pressures - primarily as a result of foreign bank
lending to Czech enterprises but perhaps also due to eased currency
convertibility controls - are likely to be the most troublesome issues in
1995. Continuing economic recovery in Western Europe should boost Czech
exports and production but a substantial increase in prices could erode the
Republic's comparative advantage in low wages and exchange rates. Prague
already took steps in 1994 to increase control over banking policies to
neutralize the impact of foreign inflows on the money supply. Although Czech
unemployment is currently the lowest in Central Europe, it will probably
increase 1-2 percentage points in 1995 as large state firms go bankrupt or
are restructured and service sector growth slows.
GDP - purchasing power parity - $76.5 billion (1994 est.)
-
National product real growth rate:
-
National product per capita:
-
Inflation rate (consumer prices):
$13.6 billion, including capital expenditures of $NA (1994 est.)
$13.4 billion (f.o.b., 1994 est.)
manufactured goods, machinery and transport equipment, chemicals, fuels,
minerals, metals, agricultural products (January-November 1994)
Germany 28.7%, Slovakia 15.5%, Austria 7.9%, Italy 6.4%, France 3.2%, Russia
3.2%, Poland 3.1%, UK 2.9%, Netherlands 2.4%, Hungary 2.2%, US 2.1%, Belgium
1.3% (January-June 1994)
$13.3 billion (f.o.b., 1994 est.)
machinery and transport equipment, manufactured goods, chemicals, fuels and
lubricants, raw materials, agricultural products (January-November 1994)
Germany 24.1%, Slovakia 15.6%, Russia 9.8%, Austria 7.6%, Italy 4.9%, France
3.6%, US 3.2%, Netherlands 2.9%, UK 2.8%, Poland 2.7%, Switzerland 2.2%,
Belgium 2.0% (January-June 1994)
$8.7 billion (October 1994)
growth rate 4.9% (January-September 1994)
fuels, ferrous metallurgy, machinery and equipment, coal, motor vehicles,
glass, armaments
largely self-sufficient in food production; diversified crop and livestock
production, including grains, potatoes, sugar beets, hops, fruit, hogs,
cattle, and poultry; exporter of forest products
transshipment point for Southwest Asian heroin and Latin American cocaine to
Western Europe
1.4 million annually to IMF beginning in 1994
1 koruna (Kc) = 100 haleru
koruny (Kcs) per US$1 - 27.762 (January 1995), 28.785 (1994), 29.153 (1993),
28.26 (1992), 29.53 (1991), 17.95 (1990)
values before 1993 reflect Czechoslovak exchange rates
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