CZECH ECONOMY FACTS IN BRIEF 2016

Transcription

1 CZECH ECONOMY 2016

2 GENERAL INFORMATION Czech Republic is a country with a population of 10.5 million people situated in the heart of Europe. It has been known for centuries as an industrial giant of this region it was a driving engine of Austro-Hungarian empire, then of Czechoslovakia at the beginning of the 20th century, and then of the whole eastern bloc led by the Soviet Union. Although the centrally planned economy directed the country for more than 40 years, and hampered the Czech industry, culture and economic situation, after 26 years of market economy we can say that Czech Republic is back on its track to be an important player on the European continent. Located at the crossroads of Europe, the Czech Republic is a nation of vast cultural and historical heritage as well as inspiring natural beauty. Its economic performance has ensured its successful entry into the European Union and established it as an important economic player in the increasingly globalized world. The Czech Republic is divided into 14 regions, including the capital city Prague. Prague is amongst the most developed regions in the EU, with a GDP per capita over twice the Czech average and an unemployment rate half that of the national rate. Prague has been one of the most economically developed region of the 10 nations which joined the EU in Area: 78,867 km 2 Population: 10,5 million Labor force: 5,3 million Capital: Prague Length of state border: 2,303 km Border countries: Germany (810 km) Poland (762 km) Austria (466 km) Slovakia (265 km) Selected distances from Prague: Berlin 282 km Paris 864 km London 1,030 km Copenhagen 634 km Stockholm 1,054 km Oslo 1,117 km Helsinki 1,302 km 2

3 The Czech Republic s key advantages as an investment location include: Central location in Europe Strong presence of foreign investors EU membership Availability and quality of local suppliers Existing platform for R&D Compact and high-quality infrastructure Skilled workforce High share of secondary and tertiary education Favorable labor costs and price stability Transparent system of investment incentives Mentality, culture and attitudes close to western countries Enviable life style Source: CzechInvest, 2016 Time zone: GMT +1, summer time GMT +2 Official language: Czech Official currency: Koruna (Kc) Czech Crown (CZK) 1 EURO = 27,020 CZK KEY INDICATORS REFERENCE GDP growth rate 4.2% Inflation 0.3% Interest rate 0.3% Trade balance (CZK million) 429,197 FDI inflow (USD million) 4,993 Number of banks 46 VAT 21% Unemployment rate 6.2% Share of households with internet connection 73.2% Share of renewable energy sources 13.2% Share of people with university education 17.6% Number of hospital beds 6,6/1000 people Tourist visits 15,981,115 Average monthly wage (CZK) 28,152 Number of regions 14 Population 10,537,818 Source: Czech National Bank, 2016 ; Czech Statistical Office 3

4 RAPID GROWTH WITH THE MARKET ECONOMY 2015 GDP 2015 GDP (PPP) GDP (nom.) GDP (PPP) Euro million per capita per capita EU28-100% Czech rep % Denmark % Finland % Norway % Sweden % Slovakia % Poland % Hungary % Source: EUROSTAT, 2016 After the financial crisis impacts slowly faded away, Czech economy became one of the fastest growing in the whole EU. This was mainly caused by the intervention of the Czech central bank, which helped the exports of the country, and then of course it is due to the higher government spending. These measures helped the Czech economy in the short-term after the crisis, but in the long run these measures will have to be probably left out, because they could really harm the economy. Real GDP growth * * 2017* Czech rep. Denmark Finland Norway Sweden Source: OECD,

5 FOREIGN DIRECT INVESTMENTS IN CZECH REPUBLIC After 1989 Czech Republic became one of the fastest growing economies of Central Europe. This was mostly caused by the well- -performed transformation from a centrally planned economy to a dynamic market-based economy. The successful transformation, and the entering of the country in western structures such as the EU or NATO helped to create a relatively quality institutional environment that attracted many foreign investors. In 2014 (the most recent data available) the FDI in Czech economy was only EUR 100,1 billion. As mentioned in the graphs below, the largest amount of investments came from Netherlands and more than the third of all FDI headed to the manufacturing industry. Foreign direct investments , ,1 13,2 6,1 4,7 3,9 3,8 12,6 Netherlands Austria Germany Slovakia Cyprus Switzerland France Luxembourg Other Source: ČNB, 2016 Foreign direct investments by field ,5 3,1 5,6 5 7,1 7,1 33,4 10,7 25,4 Manufacturing industry Finance & Insurance Warehouses & retail Real estate ICT business Private property sales Technical field Science & Research Rest Source: ČNB,

6 FALLING UNEMPLOYMENT, BUT LASTING REGIONAL DIFFERENCES According to the Czech Statistical Office (ČSU) the medium monthly wage in Czech Republic grew by CZK 882 to CZK in 2015; the average monthly wage in 2015 reached CZK Four out of five employees were earning gross wages between CZK 12,000 and CZK 42,000 a month. The highest wages in the long term are in the banking and insurance sectors, which are about twice the average of other sectors, but employees in information and communication technologies are catching up very fast. Czech labor costs in 2015 represented roughly one third of those in Denmark, Sweden and Finland and one fourth of Norway s. Unemployment rate in Czech Republic is currently the second lowest in the EU after Germany. As a matter of fact, Czech unemployment in the past decade has been under the average of the whole EU. Although the aggregate looks really nice, if we look closer at the individual regions of Czech Republic we can find large differences between them. Currently, the best situation with unemployment is in the capital of Prague and the worst one is in the Moravian-Silesian region in the north of the country, which is famous for its coal mining and heavy industry branches of economy that are slowly fading away. This will probably cause even more troubles with unemployment rate for Czech economy in the future. 1. Quarter of a year ,00% ,00% ,70% ,80% ,00% ,20% ,10% ,40% ,80% ,00% ,30% Source: ČSÚ, 2016 Large regional differences PRAGUE SOUTH BOHEMIA CENTRAL BOHEMIA VYSOČINA PILSEN SOUTH MORAVIA PARDUBICE OLOMOUC ZLÍN HRADEC KRÁLOVÉ KARLOVY VARY LIBEREC ÚSTÍ NAD LABEM MORAVA/SILESIA 2,3 3,3 3,3 3,4 3,6 3,7 4,2 4,2 4,7 4,7 5 5,2 5,9 8,

7 EXPORTS, EXPORTS, EXPORTS It is obvious that Czech Republic is a small open economy relying on its exports to foreign countries. In 2014 the value of goods and services sold abroad surpassed 80% of country s GDP. The table below shows that most of the exports head to Czech s closest Western neighbor Germany. Germany is the Czech biggest business partner not only on the export side, but also on the import. This creates a heavy dependence of the Czech economy on its German neighbor, and might cause troubles if Germany enters in a recession of any kind. On the one hand, business with Nordic countries is quite smaller than the one with neighboring countries, thus none of them reached the top ten in exports or imports. On the other hand, the Nordic countries have come to play a far more significant role in Czech economy than their combined population would indicate. As a Czech export market the Nordic countries overshadowed the USA in A number of the around 400 Nordic companies currently established in the Czech Republic are market leaders in their sector, such as the IT industry (Tieto); furniture (IKEA); paper industry (Stora Enso); construction (Skanska); pharmaceuticals (Novo Nordisk) and seafood (Marine Harvest). In addition to Czech-Nordic partnership within the EU and NATO, the cooperation also has a vital security dimension: Sweden s Saab is supplying Czech Air Force with Gripen jet fighters and Norway s Statoil safeguards Czech energy independence through natural Gas supply. Source: Nordic News, 2016 EXPORTS 2015 ths. CZK 1. Germany Slovakia Poland United Kingdom France Sweden Denmark Finland Norway Iceland Source: ČSÚ, 2016 IMPORT ORIGINS 2015 ths. CZK 1. Germany China Poland Slovakia Italy Sweden Denmark Finland Norway Iceland Source: ČSÚ,

8 LARGEST NORDIC COMPANIES Denmark: Bang & Olufsen, Cembrit CZ, Coloplast, Danfoss, DSV, Fibertex, ISS Facility, JYSK, LEGO Production, Marius Pedersen, Nilfisk, Novo Nordisk, Orifarm, Radiometer, ROCKWOOL, VELUX Finland: Caverion, Cramo, Dywidag Prefa, ENSTO Czech, Hansa, Huhtamaki, Huhtamäki ČR, KONE, LINDSTRÖM, LMC, Metso Minerals, Nokian Tyres, Orion Pharma, Ramirent, Ruukki CZ, ŠKODA TRANSPORTATION, Tieto Czech, Uponor Infra, YIT Iceland: První Digitální, DCG, Creditinfo Solutions, Inkasso Servis Norway: Cogen CZ, DNV, Elopak, Helly Hansen, Hydro Aluminium, Icas CS, Isola Powertekk, JOTUN CZECH, Kampa Group, Kverneland Czech, Orkla/HAME, Scandique, Scatec Solar, Tomra, Vitana, Vitana, WIKOV Gear, Yara Sweden: ABB, Alfa Laval, ASSA ABLOY, Atlas Copco, Electrolux, ESAB, Euro-Center, Gambro, H&M, IKEA, LINDAB, LINDEX, Llentab, Loomis, Lundbeck, Mölnlycke, NIBE, Oriflame, Pramet, Saab, Sandvik, Scania, SECO TOOLS, SECURITAS, Skanska, Stora Enso, Trelleborg, VOLVO Nordic sales of Škoda auto a.s. (Number of sold cars) Škoda cars Denmark Finland Norway Sweden Total Source: Statista, 2016 GRIPENS TRIGGERED EXPORT RELATIONS From 2004 to 2014, Czech Republic gained CZK 31.6 billion thanks to the offset program that was concluded in connection with the leasing of 14 Swedish Gripen jet fighters in According to the 2004 Czech-Swedish contract, the industrial cooperation was to bring 130 percent of the value of the agreement for the lease of the Gripens, or CZK billion. Direct investments in the Czech defense, aerospace and security sectors represent 20 percent of the contract; the remaining indirect offsets are industrial cooperation and exports opportunities for Czech companies. The cooperation with our Swedish partners has been excellent from the very beginning, Czech Defense Minister Martin Stropnicky comments. Source: ČTK,

9 BETTER CONDITIONS TO START OUR OWN BUSINESS THAN EVER. Doing business in central Europe was quite difficult in the 90s. The era of communism scarred this region with large bureaucracy and corruption, but since then, the central European countries came a long way towards freer business and entrepreneur environment. This was mostly caused by adopting new legislation, cultivation of the institutional environment of the countries and by destroying almost all remnants of the centrally planned economy. For someone it might be surprising that the Nordic countries, which are always praised by today s social democrats for their welfare activities towards their citizens, are the ones with the freest business environment that empowers their economic growth. This might be a good lecture for the small countries such as Czech Republic expand the freedom of entrepreneurs more than you are expanding the amount of your welfare state policies. Source: World Bank, 2016 Ease of doing business overall ranking Estonia 21. Estonia 17. Estonia 16. Estonia 48. Slovakia 46. Slovakia 32. Poland 25. Poland 51. Hungary 55. Poland 37. Slovakia 29. Slovakia 62. Poland 57. Hungary 44. Czech Republic 36. Czech Republic 64. Czech Republic 65. Czech Republic 54. Hungary 42. Hungary Source: Doing business, 2016 Mobile phones everywhere % of population with Czech internet is speedy Mbit/s Norway 96,1 1. South Korea 25,3 Denmark 96,0 3. Japan 15,0 Finland 94,0 5. Sweden 14,1 Sweden 89,1 9. Czech Rep. 12,3 Germany 86,7 11. Finland 11,7 Slovakia 82,6 15. Norway 11,4 Estonia 81,6 17. Denmark 11,2 Czech Rep. 77,4 23. Hungary 8,8 Hungary 74,3 25. Poland 8,6 Poland 67,1 26. Slovakia 8,6 Source: ILS, 2016 Source: Akamai, 2016 Doing Business Estonia Czech Republic Slovakia Hungary Poland 9

10 EDUCATION & EQUAL OPPORTUNITIES Female employment rate in the Nordic countries is, by far, the highest of all Europe. This is mainly caused by the cultural differences in relations between men and women, which is historically more liberal in Nordic countries. Czech Republic is, in this matter, slightly above the EU 28 average, but of course, there is always some space for the improvement of the current situation. Czech Republic performs well in many measures of well-being in OECD s Better Life Index. The country ranks above the average in personal security, education and skills, work-life balance and environmental quality, but below average in jobs and earnings, housing, health status, income and wealth, social connections, and civic engagement. Good education and skills are important requisites for finding a job. In Czech Republic, 92 percent of adults aged have completed upper secondary education, well above the OECD average of 75 percent and the highest rate in the OECD. In terms of education quality, the average student scored 500 in reading literacy, math and science in the OECD s Program for International Student Assessment. This score is slightly higher than the OECD average of 497. On average, Czech girls outperformed boys by 9 points Source: Nordic News, 2016 Employment rate by gender 2015 Female Male Sweden 78,3 82,5 Germany 73,6 82,3 Denmark 72,6 80,2 Finland 71,8 73,9 Austria 70,2 78,4 Czech rep. 66,4 83,0 EU 28 64,3 75,9 Hungary 62,1 75,8 Poland 60,9 74,7 Slovakia 60,3 75,0 Women in politics 2015 Sweden 43,6 Finland 41,5 Norway 39,6 Denmark 38,0 Germany 36,5 Austria 30,6 Poland 24,1 Czech rep. 20,0 Slovakia 18,7 Hungary 10,1 Source: INFRASTRUCTURES Czech Republic has a long tradition in the transport industry. Firms based in the country create vehicles from cars and locomotives to trolleybuses and trams. These products are famous not only in their home country, but also abroad. The company has been active in the Nordic countries for a number of several years; it is currently participating in several public transportation tenders in the region. In , the Czech engineering company s subsidiary ŠKODA Vagonka delivered 16 suburban train units to the Finnish Railways. The trains are specially designed to withstand Scandinavia s tough climate conditions. Landskrona in Sweden is operating trolley buses produced by another subsidiary, ŠKODA Electric. 10

11 IT IS GOOD TO BE CZECH Czech Republic is, and has always been, famous for its beautiful nature, some magical cities and many sights to visit. Czech Republic is safe even in today s complicated security situation, its population is getting richer and richer, healthcare is on the level of the Nordic countries and beer is still cheap. Prague usually ranks among the world s most beautiful cities and everywhere there are always things to do from theaters, sports games and good restaurants, to concerts, sightseeing or just hanging out in the cities or the countryside. However bad might be the mood of Czech people about their current situation, they have never lived through such a long period of peace and prosperity, and hopefully it will last as long as possible. Purchasing Healthcare Consumer price Property price Overall - quality Safety index Pollution index power index index index to wage ratio of life index 5. Denmark 7. Austria 6. Austria 2. Norway 6. Denmark 1. Finland 1. Denmark 9. Finland 9. Denmark 8. Denmark 5. Denmark 14. Norway 2. Sweden 6. Austria 12. Sweden 13. Finland 13. Finland 10. Sweden 17. Finland 4. Norway 9. Finland 14. Norway 17. Slovakia 14. Sweden 15. Finland 26. Slovakia 8. Austria 12. Sweden 23. Austria 18. Czech Rep. 15. Czech Rep. 19. Austria 28. Austria 9. Denmark 14. Norway 31. Czech Rep. 22. Poland 19. Norway 38. Slovakia 29. Czech Rep. 23. Czech Rep. 20. Czech Rep. 32. Poland 28. Norway 43. Slovakia 40. Hungary 32. Hungary 24. Slovakia 28. Slovakia 37. Slovakia 33. Hungary 46. Poland 43. Czech Rep. 34. Poland 25. Hungary 30. Poland 48. Hungary 44. Sweden 56. Hungary 46. Poland 41. Sweden 30. Poland 37. Hungary Source: Numbeo, 2016 / 11

12 phone: Václavské náměstí 51, Prague 1