CZECH ECONOMY CZECH ECONOMY. Ing. Jaroslav Vomastek Director of the Department of Economic Analysis

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2 Overview of the Czech Economy GDP Employment Balance of Payments FDIs Balance of Budget Industry Foreign Trade 2

3 Main Characteristics of the Czech Economy High economic growth until mid 2008 catching up the EU GDP level (83% of EU average in 2009), after recent recessions drop to 81% of EU average in Big portion of manufacturing sector (24% GDP) Small, open economy Strong trade and ownership links with EU Rapid and balanced real convergence Low inflation External balance current account in a slight deficit (-1.4% GDP in 2013) due to growing trade balance surplus Fiscal prudence necessity reducing of public deficit (1.4% GDP in 2013) and decelerating of public debt (46,0% GDP in 2013) 3

4 Gross Domestic Product Peak in the first quarter 2006 (7.6% growth) During 2009, the Czech economy fell in the deepest recession in its recent history due to global crisis GDP declined by 4.4% in 2009, signs of recovery occurred in the first half of 2010 Close relationship between domestic economy and external demand behind this development Czech GDP 1.8% growth in slightly higher than average one in EU 1.6%, Recovery was not uniform (industry vs. construction) The economy declined by 0.9% in 2012 and by 0,9% in 2013 (y-o-y change data) The outlook for this year predicts 1.2% GDP growth 4

5 GDP Source: CZSO, graph MIT, Department of Economic Analysis 5

6 GDP by countries Source: Eurostat 6

7 GDP BY SECTORS Source: CZSO, graph MIT, Department of Economic Analysis 7

8 BALANCE OF PAYMENTS Initially current account deficit caused by a balance of trade deficit compensated by inflow of foreign capital Pro-export effect of investment helped the balance of trade to become positive (since 2005) But the current account as a whole remained in red numbers due to negative income balance (includes the outflow of dividends and reinvested earnings) High share of FDI is being financed from reinvested earnings from previous investments On the other hand inflow of foreign capital is one of the major causes of the raise of external debt 8

9 CURRENT ACCOUNT Source: CNB, graph MIT, Department of Economic Analysis 9

10 INWARD FOREIGN DIRECT INVESTMENT Source: CNB, graph MIT, Department of Economic Analysis 10

11 FDI BY COUNTRIES Source: CNB, graph MIT, Department of Economic Analysis 11

12 OUTWARD FOREIGN DIRECT INVESTMENT Source: CNB, graph MIT, Department of Economic Analysis 12

13 GENERAL DEBT AND BALANCE OF BUDGET Source: CZSO, graph MIT, Department of Economic Analysis 13

14 INDUSTRIAL OUTPUT Two recessions in recent development, 2009 and 2012, in 2013 growth again Significant decline of industrial production in 2009 (-13.6 %), then a period of growth (8.6% in 2010 and 5.9 % in 2011) Industrial production: 0.8 % decline in 2012, in January - December 2013 growth 0.5 % Important share of automotive industry (25.4 %) New orders: growth in 2012 (2.2 % y/y), non-domestic (5.6 % y/y), growth in fourth quarter 2013 (13.5 % y/y), non-domestic (17.8 % y/y), growth in 2013 (4.3 % y/y) non-domestic (5.8 % y/y) Outlook for 2014 the final output depends essentially on the situation in partner countries 14

15 INDUSTRIAL PRODUCTION Source: CZSO, graph MIT, Department of Economic Analysis 15

16 INDUSTRIAL PRODUCITON Source: CZSO, graph MIT, Department of Economic Analysis 16

17 INDUSTRIAL PRODUCTION Source: CZSO, graph MIT, Department of Economic Analysis 17

18 FOREIGN TRADE Foreign trade reached billion CZK surplus in 2013 Exports grew by 3,0 % and imports by 1.8 % in 2013 Strong reliance on manufacturing (53.9 % share of machinery and transport equipment in 2013) and on exports to EU-28 (81 % of total exports in 2013) 18

19 FOREIGN TRADE Source: CZSO, graph MIT, Department of Economic Analysis 19

20 EXPORT BY COMMODITY (%) Source: CZSO, 20

21 IMPORT BY COMMODITY (%) Source: CZSO 21

22 EXPORT BY COUNTRIES (%) Source: CZSO 22

23 IMPORT BY COUNTRIES (%) Source: CZSO 23

24 The Czech Economy Jaroslav Vomastek Ministry of Industry and Trade Na Františku 32, Praha