"Within one month our revenues had jumped over 50%."

Doing Business in Czech Republic

Prague- business in the Czech Republic

How is trade in Czech Republic and is it a good economy to invest in? In order to determine if a country is worth doing business in, vital data is needed to help in the determination process. Below, you’ll find information about doing trade in Czech Republic, along with data regarding the country’s economy and major influencing factors about trading.

It is a pluralist multi-party parliamentary representative democracy, a member of the European Union, NATO, the OECD, the OSCE, the Council of Europe and the Visegrád Group.  The Czech Republic is the first former member of the Comecon to achieve the status of a developed country according to the World Bank.In addition, the country has the highest human development in Central and Eastern Europe, ranking as a “Very High Human Development” nation according to the Human Development Index. It is also ranked as the third most peaceful country in Europe according to Global Peace Index and most democratic and healthy (by infant mortality) country in the region, as reported by the Democracy Index.

The Czech Republic possesses a developed, high-income economy with a GDP per capita of 80% of the European Union average, according to organizations like World Bank and Eurostat. GDP per capita at purchasing power parity was $26,100 in 2008, as measured by the IMF. One of the most stable and prosperous of the post-Communist states, the Czech Republic saw growth of over 6% annually in the three years before the outbreak of the recent global economic crisis. Growth has been led by exports to the European Union, especially Germany, and foreign investment, while domestic demand is reviving. Most of the economy has been privatized, including the banks and telecommunications. The current centre-right government plans to continue with privatization, including the energy industry and the Prague airport. A 2009 survey in cooperation with the Czech Economic Association found that the majority of Czech economists favor continued liberalization in most sectors of the economy. The country is part of the Schengen Area, having abolished border controls, completely opening its borders with all of its neighbors, Germany, Austria, Poland and Slovakia, on 21 December 2007, as reported by the Prague Post.The Czech Republic became a member of the World Trade Organization. The Program for International Student Assessment, coordinated by the OECD, currently ranks the Czech education system as the 15th best in the world, higher than the OECD average.

The principal industries of the Czech Republic are heavy and general machine-building, iron and steel production, metalworking, chemical production, electronics, transportation equipment, textiles, glass, brewing, china, ceramics, and pharmaceuticals. Its main agricultural products are sugar beets, fodder roots, potatoes, wheat, and hops. The credit portion of the Financial crisis of 2007–2010 did not affect the Czech Republic much, mostly due to its stable banking sector which has learned its lessons during a smaller crisis in the late 1990s and became much more cautious. As a fraction of the GDP, the Czech public debt belongs among the smallest ones in Central and Eastern Europe. Moreover, unlike many other post-communist countries, an overwhelming majority of the household debt – over 99% – is denominated in the local Czech currency. That’s why the country wasn’t affected by the shrunken money supply in the U.S. dollars. However, as a large exporter, the economy was sensitive to the decrease of the demand in Germany and other trading partners. In the middle of 2009, the annual drop of the GDP for 2009 was estimated around 3% or 4.3%,according to Earth Times News. The impact of the economic crisis may have been limited by the existence of the national currency that temporarily weakened in H1 of 2009, simplifying the life of the exporters.

Overall, Czech Republic seems like a relatively good country to do business or trade in, since it is a stable and prosperous democracy. While its population might me somewhat small at 10,562,214, as reported by a 2011 government census, the market is quite rich with a relatively high GDP per capita. According to an estimate by the IMF in 2011, the Czech GDP was $218.363 billion in nominal terms. The World Bank’s Ease of Doing Business Survey ranks the Czech Republic at 64th for 2012, which is a increase of 6 places from 2011. So clearly the business atmosphere is getting better and better in the Czech Republic. However, while it might not be a part of the Eurozone, there is a good chance that the Eurozone crises might spill over into the Czech Republic in the forms of less demand for exports.

 

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Author:Globial International Business Team

The Globial International Business Team researches, analyzes, and reports on all things related to global trade and business.

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