Business and Investment Development Agency


The Czech economy continues to flourish

According to information made public in the third quarter, the Ministry of Finance of the Czech Republic expects GDP growth of six percent for 2006. The main factors in this result are the country’s excellent foreign-trade balance and inflow of foreign investments. The same rate of growth is forecasted by the Vienna Institute for International Economic Studies (WIIW).

The Czech economy continues to flourish

“I think that you will not find another country in Europe with concurrent low inflation, a low interest rate and such economic growth. This is definitely good news for investors,” says Tomas Hruda, CEO of CzechInvest. At 2.5%, the interest rate set by the Czech National Bank is the lowest of all countries in the European Union.

Exports have had a particularly positive impact on the economy. Last year the growth of exports was twice that of imports. The main export items are vehicles, machinery and electronics. According to WIIW analyst Petr Havlik, products with higher added value are driving exports. Such products are displacing the wood, textile and tanning industries.

Foreign investment projects from previous years have been major contributors to export growth.Products manufactured by foreign investors are for the most part dispatched to international markets. The launch of the Toyota Peugeot Citroën Automobile (TPCA) car plant, which kick-started production at its suppliers, had a major impact on economic growth. Doing business in the Czech Republic is thus beneficial both for investors and for the country.

Czech results underscored the sharp contrast in economic growth between the new European Union members and the rest of the EU, where, according to the Eurostat statistical agency, GDP for all 25 member countries rose by 2.8 per cent in the third quarter of 2006. Hungarian GDP grew by 3.7 percent and the Polish economy grew by 5.2 percent. GDP growth in the United Kingdom and Germany has been estimated at 2.8%. However, growth in the euro area in 2006 should reach the highest rates since 2000. Global dynamics will continue to be strongly boosted by Asia’s economies, mainly by those of China and India.

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