Czech Republic: Economic and Political Outline

Economic Overview

The Czech Republic's economy is one of the most developed in Central and Eastern Europe. Its economic growth is strongly influenced by the demand on exports and foreign direct investment inflow. The country’s GNP growth which was increasing steadily over the past few years, experienced a strong drop in 2009 (-4.2%) due to the global recession.  The growth rate became positive again in 2010, stimulated by exports which shows that the Czech Republic's economy is in full expansion and that its basis is becoming solid.  The growth rate is estimated at 2% in 2010 and it should become stronger in 2011. 

Inflation remained under control but the public funds decreased and the budgetary deficit became larger.  In the context of the economic revival, the government has announced a program to reorganize its public finance for 2011.  Severe measures have already been taken in order to reduce expenditures (suppression of subsidies, freeze salaries, etc.) and to increase the revenues.  The objective is to bring the public deficit to 3% of the GDP by 2013, with the idea of meeting the Maastricht's requirements for the adoption of the Euro as its currency. 

The unemployment rate increased under the effect of the global crisis and it remained stable at 8% of the active population.

Main Sectors of Industry

The agricultural sector went through a serious crisis in the 90s and, even today, it is still heavily subsidized.  It generates approximately 2% of the country’s GNP and employs more than 3% of the active population. The main agricultural products are sugar beets, potatoes, wheat, barley and hops. 

The production sector is mostly private, it accounts for almost 40% of the GNP and employs 40% of the active population.  The growth at the level of performance was parallel to the increase in manpower's productivity.  One of the main manufacturing sectors is the auto industry, with Skoda (Volkswagen company).  Foreign investors such as Toyota and PSA also started producing cars in the Czech Republic since 2005.  However, this sector has now reached a saturation point. Nearly 10,000 jobs were eliminated in 2009 because of the international crisis. The textile sector is becoming very dynamic. 

Services contribute to 60% of the GDP and employ more than half of the active population.  The tourism sector is booming, thanks to the city of Prague, in particular, which is a very attractive tourist center.

Source: World Bank - Last Available Data.

Indicator of Economic Freedom

Score:

70.4/100

Position:

Mostly free

World Rank:

28/179

Regional Rank:

15/42

Distribution of Economic freedom in the world
Source: 2011 Index of Economic freedom, Heritage Foundation

Sources of General Economic Information

Ministries

Ministry of Agriculture
Ministry of Foreign Affairs
Ministry of Industry and Trade
Ministry of Finance

Statistical Office

Czech National Statistical Office  

Central Bank

Czech National Bank  

Stock Exchange

Prague Stock Exchange
Czech capital market association

Other Useful Resources

Czech Republic, Official website of the Czech Republic

Main Online Newspapers

Lidové Noviny ( in Czech only ), daily
Hospodárské noviny (in Czech only), daily
MF DNES (in Czech only), daily
Právo (in Czech only), daily
EKONOM (in Czech only), weekly
The Prague Post
The Prague Tribune
Prague Business Journal

Economic Portals

Czech Happenings, Czech Press Bureau (in Czech and in english)
Businessinfo.cz, Czech business web portal
Financni Noviny, News in English

Political Outline

Type of State

Republic state based on parliamentary democracy.

Executive Power

President is the chief of the state and is elected by the parliament for a five-year term. President has limited specific powers, most important of them being power to return laws to the parliament and dissolving of the parliament under certain special conditions. President appoints the Prime Minister and the Cabinet on the recommendation of the Prime Minister. Prime Minister is the head of the government and also holds the executive powers which include implementation of the law in the country and running the day-to-day affairs. Prime Minister is generally the head of the majority party or coalition in the parliament and yields considerable political power.

Legislative Power

The legislature is bicameral. The parliament consists of: Senate (the upper house), its members elected by popular vote to serve six-year terms and the Chamber of Deputies (the lower house) with its members elected by popular vote to serve four-year terms. The executive branch of government is directly or indirectly dependent on the support of the parliament, often expressed through a vote of confidence Prime Minister cannot dissolve the parliament without taking President and the members of the parliament into confidence.

Main Political Parties

Czech Republic has a multi-party political system. The main political parties in the country are:
- CSSD (Czech Social Democratic Party) – defends a socially oriented state with a market economy;
- ODS (Civic Democratic Party) – a liberally conservative party, on the right of the political spectrum. It defends the principles of personal freedom and individual responsibility, entrepreneurship and private ownership;
- KSCM (Communist Party of Bohemia and Moravia) - heir of the Communist party of Czechoslovakia, though it has now modified its programme to suit country's new democratic politics;
- KDU-CSL (Christian Democratic Union-Czechoslovak People's Party) – a conservative political party which draws its main support from the Catholic rural areas in Moravia, in the center of the political spectrum ;
- Green Party (SZ) - highlights through its program the topic of ecology.

Current Political Leaders

President: Vaclav KLAUS (since March 2003) – ODS
Prime Minister: Petr NECAS (since June 2010) – ODS

Next Election Dates

Presidential: February 2013
Chamber of Deputies: 2014

Indicator of Freedom of the Press

World Rank:

14/179

Evolution:

10 places up compared to 2010

Source: Worldwide Press Freedom Index 2010, Reporters Without Borders

Indicator of Political Freedom

Ranking:

Free

Political Freedom:

1/7

Civil Liberties:

1/7

Map of freedom 2010