International Property News

Fast GDP growth pulls CR to 82% of EU level

14th March 2008

The record-high economic growth for 2007 sent the Czech Republic to 82 percent of the European Union's economic level measured by per capita gross domestic product in purchasing power parity, the Czech Statistical Office (CSU) said Friday.

The country could reach the EU average in 2020, Patria Finance analyst David Marek told CTK. In 2006 it was at 79 percent of EU level. The neighbouring Slovakia was at 68 percent, Poland at 55 percent and Hungary at 64 percent last year, according to estimates of the EU statistical office Eurostat.

The Czech economy grew by 6.5 percent last year, 3.9 percentage points faster than the eurozone.

Also connected with the good condition of the economy was the number of unemployed that dropped to its lowest since 1997. The number of job seekers decreased by 95,000 on the year to 276,300 last year, the CSU says in its study on Czech 2007 economic development.

"The decline in unemployment was recorded in all regions, in particular in areas with persisting high or above-average unemployment rate," the CSU said. The number of long-term unemployed decreased as well.

On the other hand, inflation increased markedly at the end of last year largely as a result of the hefty growth in world prices of energy and foodstuffs. In the Czech Republic, this growth was partly offset by gains of the national crown currency. Average year-on-year inflation in the country was at 2.8 percent in 2007.

The harmonised index of consumer prices in the Czech Republic grew four percent in October, 5.1 percent in November and 5.5 percent in December, which was significantly above the EU average.

"The trend seen in 2000-2006 when inflation was low and relatively stable is therefore over," statisticians said.

Despite the price growth, Czech households raised their deposits in commercial banks by 10.6 percent to Kc1,230bn last year, the highest year-on-year increase since 2001. At the same time, however, household debts rose by Kc186bn to Kc726bn.

The economic growth also had a favourable effect on performance of the state. State budget revenues grew faster than spending, and the budget deficit reached Kc66.4bn against the planned Kc91.3bn.