Czech Republic

Capital: Prague

Local time:
It is %T:%M %A in Prague

Exchange rate on :

GDP growth rate: 3.5% in 2012

FDI stock: 101 074 million USD in 2007

Country risk: See the country risk analysis from the Czech Republic provided by Ducroire.

Economic trends

The Czech Republic's economy is one of the most developed in Central and Eastern Europe. Its economic growth is strongly influenced by demand for exports and foreign direct investment inflow. The country’s GDP growth rate increased constantly over the past few years. However, a strong drop was recorded in 2009, with a negative GDP growth rate. Growth should increase again from 2010, a fact that shows the Czech economy's rapid growth and its strengthening foundations. Domestic demand will be a less dynamic economic growth driver and net trade will be less of a stimulus for growth because demand for euro zone imports will be slower, due to the unfavorable economic situation. Inflation remains under control but, public funds are progressively dwindling and the budgetary deficit is increasing. However, the government has committed itself to reducing the deficit in order to meet the Maastricht requirements for the adoption of the euro in the year 2010. In general, the Czech Republic has the means to weather the financial crisis because of its banking system which has been solid and stabilized since the 1990s and a strong currency.

Main branches of industry

The agricultural sector went through a serious of crisis in the 90s and is still heavily subsidized today. It generates approximately 3% of the country’s GDP and employs nearly 4% of the active population. The main agricultural products are sugar beets, potatoes, wheat, barley and hops.

The manufacturing sector constitutes about 40% of the country’s GDP and is mainly private. There was a performance growth in addition to an increase in labor productivity. One of the main manufacturing sectors is the car industry, with Skoda (Volkswagen company). Foreign investors such as Toyota and PSA also started producing cars in the Czech Republic in 2005. However, this sector has now reached saturation point. Nearly 10,000 jobs were cut in 2009 because of the international crisis. The textile sector is becoming very dynamic and the tourism sector is booming, because of the city of Prague in particular, which is a very attractive tourist center.

International trade

The Czech Republic’s membership of the EU has improved trade owing to the removal of customs and border controls. This has helped to improve the trade balance. Becoming a member has allowed the Czech  Republic to enter into the common market and to consolidate its position as a low-cost production base. 80% of the country’s trade is now conducted with OECD countries (of which 80% is from EU countries). A number of agreements ease trade with neighboring states (CEFTA). The country recorded a positive trade balance in 2008, but should show a deficit in 2009 and 2010, especially because of the drop in orders from its trade partners (the automobile sector in particular). In effect, the financial crisis' impact on the different European Union countries has put commercial trade in a precarious position inside the European Union.

Learn more

For more information on the Czech Republic

The Country Profiles of the Foreign and Commonwealth Office

Countries information of the UK Trade and Investment Website

For more international news

Business News of the British Chamber

For more advices

The business advices of the Foreign and Commonwealth Office

Are You Ready to Export? - The online test of the UK Trade and Investment Website