The Czech Economy Development

Summary

The Czech economy development in the first half 2005 led to an improvement of its total economic position. As against the preceding medium-term trend compliance among basic economic parameters, such as economic growth, prices stability, internal and external balance, drop of unemployment and rising rate of employment had been reached. The overall economic situation in comparison to the last year is becoming better. The Czech economy growth proceeded with a high rate of growth; the first half 2005 GDP growth speeded up year – on – year. Some of its outlays components as well as total domestic demand grew slower on a year before, however profits of foreign economic operations resulting in foreign trade surplus became basic elements for such a fast GDP growth. The half-year GDP growth rate – in real terms by 4.9%, in Q2 by 5.1% manifestly overtook the past six-year average. Such a growth was markedly affected by net exports. A negative interrelationship between current account of balance of payments and GDP decreased; also the imbalance measured by a share of net exports to GDP had been eliminated as a result of sizeable growth of total exports than total imports. The year – on – year rise of consumer prices was lower (1.6%) and slowed down. Production prices grew faster than consumer prices excluding prices for market services; having been partly reflecting prices movements of raw materials at world markets. Such impacts of considerable increase on the Czech economy especially exorbitant petrol prices increase were abated by appreciation of CZK exchange rate against USD. A perceptible decline in prices of exports than those in import in the first half 2005 signalled worsening in exchange relations and a slight devaluation of domestic labour at world markets. Faster growth of receipts of the state budget passed growth of its outlays what ended in moderate surplus, which posed a positive change to GDP. In the first half 2005 the labour market conditions improved at all year – on – year. Rise of employment stood for a factor of employment drop, reflected a setting up of new working places, behind realization of outlays for gross fixed capital production from preceding years.