Czech Republic

The Czech Republic has a population of 10.2m people and is situated in the centre of Europe with borders to Poland, Austria, Germany and Slovakia. As a result, it is ideally positioned within the heart of the European Union ("EU"). The economy of the Czech Republic and its capital Prague has grown significantly in recent years, with its entry into the EU in May 2004 providing a catalyst to further economic expansion. Whilst the Czech Republic remains one of the most developed of the Central and Eastern European countries, its accession into the EU has brought with it both the advantages of the single regulated market and improvements in infrastructure through additional EU funding. This combination of location, an educated workforce and a growing economy, has stimulated high levels of domestic and foreign investment. The Czech Republic is one of the most stable and prosperous of the post-Communist states of Central and Eastern Europe. Maintaining an open investment climate has been a key element of the Czech Republic's transition from a communist, centrally planned economy to a functioning market economy. As a member of the European Union, with an advantageous location in the center of Europe, a relatively low cost structure, and a well-qualified labor force, the Czech Republic is an attractive destination for foreign investment. Prior to its EU accession in 2004, the Czech government harmonized its laws and regulations with those of the European Union. The government plans to meet the criteria for joining the eurozone around 2012. The small, open, export-driven Czech economy grew by over 6% annually from 2005-2007 and the strong growth continued throughout the first three quarters of 2008. Despite the global financial crisis, the conservative Czech financial system has remained relatively healthy. The rate of Czech economic growth, however, began to fall in the fourth quarter of 2008, mainly due to a significant drop in demand for Czech exports in Western Europe. This trend is expected to continue, with many analysts predicting Czech economy to contract slightly in 2009.

Economic Strengths

Skilled industrial labour force, Tourism, car manufacturing. Infrastructure improvements. Euro adoption expected around 2012. Manufacturing exports and strong FDI.

Economic Weaknesses

Rising food & energy prices. Ageing population & rising dependency ration. Skill shortages.

Source: Central Intelligence Agency; The World Factbook, March 2009