Low demand from EU partners continues to hit exports
- Austerity measures hit domestic demand
- Export growth is forecast to slow down
- However, budget deficit targets will be met in 2013
- Construction and textile sectors remain in trouble
General Information
- Capital - Prague
- Government type - Parliamentary democracy
- Currency - Czech Koruna (CZK)
- Population - 10.6 million
- Status - Upper middle income country
- (GDP/capita: US-$ 18,037 in 2011)
Main import sources (2012, % of total)
- Germany - 25.2%
- China - 11.1%
- Poland - 7.1%
- Slovakia - 6.0%
- Russia - 5.6 %
Main export markets (2012, % of total)
- Germany - 32.4%
- Slovakia - 9.0 %
- Poland - 6.1 %
- France - 5.1%
- UK - 4.8 %
After a 1.2% year-on-year contraction in 2012, the Czech economy continued to shrink in early 2013:
by 2.2% year-on-year in Q1 (down 1.1% on the previous quarter), with GDP forecast to decrease 0.8%
in 2013 after its 1.2% decline in 2012.
The continued weak economic performance is partly the result of austerity measures. Tax increases
and public sector cuts have lessened the purchasing power and confidence of both households and
businesses, with a consequent impact on domestic demand. Private consumption is expected to
increase only slightly - by1.2% - this year after a 2.6% decrease in 2012, while lower government
spending will continue to have a negative effect on growth. Industrial production will level off this
year after a drop in 2012, investments will continue to decrease.
At the same time, low demand from EU trading partners will continue to hit exports. At more than
75%, the Czech Republic’ export-to-GDP ratio is one of the highest in the EU, making it especially vulnerable to trade losses.
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