Czech Republic Economy


At the beginning of the last century the territory of today’s Czech Republic was one of the most industrialized areas in Europe; and even during the period in which it gravitated in Soviet orbit its industries have always distinguished themselves for technological advancement. But after the communist collapse and the separation from Slovakia, the re-entry into a global European market showed all the backwardness of the national economic structure. The path to catch up with the western half of Europe has mainly passed through the privatization of companies and industries, which, following the communist conversion of the economy, became entirely state-owned. These were partly returned to the original owners before nationalization, partly put to the ‘ auctioned or privatized through a public offer for the sale of shares; in many cases acquired by foreign companies. Monetary support from foreign countries partly facilitated the economic recovery, which between 1995 and 2000 almost doubled industrial production (which still represents the strength of the national economy today). The massive recourse to foreign capital has caused a significant increase in public debt (equal to 40% of the gross national product), but economic growth and the increase in domestic consumption and exports also favor the progressive reduction of the deficit. The country’s real problem appears to be political instability. The last two center-left executives, the one led by Miloš Zeman (1998-2002), and that of Vladimir Spidla (2002-04), were built on very small majorities, so that it was not possible to carry out a wide-ranging economic renewal program regarding privatizations, company and tax law, guarantees to citizens. On the other hand, the persistence of this instability feeds the Eurosceptic sentiments of a large part of the population, fearful that the effort made by the country to align itself with the EU corresponds to a worsening of the living conditions of citizens. In 2008, GDP stood at US $ 217,077 million, split between 2.9% of the primary sector, 38.3% of the secondary sector and 58.8% of the third sector. Unemployment stands at around 4.4%.


According to smber, the primary sector constitutes 2.9% of the gross domestic product. The current agricultural properties are the result of the privatizations of the various cooperatives and state companies of the communist era. The cultivated fields cover 42.5% of the available land, and are occupied for more than half by cereal crops (wheat, maize, oats, barley). The hops is mainly cultivated in dell’Ohře valley, and is of great importance for the connected brewing industry. We also produce potatoes, sugar beets, and fruit products (apples, pears, plums). Viticulture is limited to Moravia and some areas of the Bohemia. The woods extend over 34.3% of the territory, and timber is a resource for the paper and furniture industry, despite the deterioration of the forest heritage caused by acid rain during the last century (over 400,000 hectares of wood burned only in Northern Bohemia). The breeding of cattle, pigs and poultry is important. Lake and river fishing is practiced.


The country has coal resources: the Ostrava-Karviná mines are important, from which 88% of the total production is extracted; and lignite deposits, in Northern Bohemia. In addition, modest quantities of oil and natural gas are also extracted from the subsoil, while the metals include silver, lead, zinc, tin, magnesite and radioactive minerals. In the industrial field, the Czech Republic, having emerged from forty years of communist economy, had to recover relations with Western countries in a decade, adapting to the rules of the market economy. In the same period, industrial production, subjected to a huge effort of modernization and also supported by the inflow of foreign capital, almost doubled. Historically important are the productions linked to mineral resources: the steel industry, whose numerous blast furnaces are also used for the processing of imported material; oil refining plants; metallurgy that produces lead and copper. Cement production is also important. The area of Ostrava, famous for the concentration of “heavy” industries, is also home to a chemical industry that produces hydrochloric acid, nitrogen fertilizers, sulfuric acid, caustic soda, plastics and resins, synthetic fibers and artificial textile fibers. Near the big cities are located the mechanical and automotive, “light” industry and consumer districts. The headquarters of Skoda (which became the property of the German Volkswagen), whose cars are sold all over Europe, is located in Plzeň. Closely related to timber production are the furniture and paper industries. North Bohemia is also famous for glass, crystal (Moser and Bohemia Glass) and porcelain. The manufacture of wind, string and organ musical instruments has an ancient tradition. In the food sector there is the production of beer (Pilsener and Budvar). In Prague, investments are made for the development of the electrotechnical, electronic and new technology sectors.

Czech Republic Economy

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