czech economy 2015 · strong business and ownership relations to the eu. big portion of...

Department of Economic AnalysesCZECH ECONOMY 2015

CZECH ECONOMY 2015

28. April 2016


Overview of the Czech Economy

GDP

Labour Market

Inflation

Balance of Payments

FDI

Industry

Foreign Trade


Main Characteristics of the Czech Economy

Small, open economy, considerably dependent on foreign trade.Strong business and ownership relations to the EU.Big portion of manufacturing sector (27% of GDP in 2015).Long term real convergence to the developed countries, in 2014 GDP per capita 85% of the EU average, after recent recessions drop to 81% in 2010.Low inflation, price fluctuations caused by impacts of administrative measures.A relatively low unemployment rate, among the lowest in the EU. The current account increased surplus again in 2015, due to growing output balance.The result of fiscal consolidation in 2015 was decreasing of the government deficit and debt.


Gross Domestic Product

The Czech economy growth peaked in the second quarter of 2006 at y/y rate of 7.3%.

In 2009, due to the global crisis, the domestic economy fell in the deepest recession in its recent history, GDP declined by 4.7%.

Signs of recovery emerged in 2010, mainly due to the favourabledevelopment of foreign demand, but the growth slowed again in 2011.

Subsequent recession compared to that of 2009 milder, but longer (GDP decline by 0.8% in 2012 and by 0.5% in 2013).

Restoring growth of 2.0% in 2014 and a significant acceleration to 4.3% in 2015.

2015 growth supported by one-off factors (low oil prices, fiscal stimulus).



-8

-6

-4

-2

0

2

4

6

8

10

12

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

GDP BY COUNTRIES(y/y change in %)

Czech republic Germany Poland Slovakia EU-28 average

Source: Eurostat, graph MIT, Department of Economic Analyses



Source: CZSO, graph MIT, Department of Economic Analyses

2,4

32,5

5,6

18,3

5,0

4,4

8,1

6,8

14,8

2,1

59,5

GROSS DOMESTIC PRODUCT BY SECTORS(in %, 2015)

Agriculture Industry Construction Trade and Transportation Information

Financial Activities Real Estate Activities Technical Acitivities Public Administration Other Services


Labour Market

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

20

05

/1 4 7

10

20

06

/1 4 7

10

20

07

/1 4 7

10

20

08

/1 4 7

10

20

09

/1 4 7

10

20

10

/1 4 7

10

20

11

/1 4 7

10

20

12

/1 4 7

10

20

13

/1 4 7

10

20

14

/1 4 7

10

20

15

/1 4 7

10

20

16

/1

UNEMPLOYMENT RATE(in %)

European Union (28 countries) Czech Republic Germany Greece Spain Austria Poland Slovakia

Source: Eurostat, graph MIT, Department of Economic Analysis


Inflation

94

96

98

100

102

104

106

108

110

1/2

00

6 4 7

10

1/2

00

7 4 7

10

1/2

00

8 4 7

10

1/2

00

9 4 7

10

1/2

01

0 4 7

10

1/2

01

1 4 7

10

1/2

01

2 4 7

10

1/2

01

3 4 7

10

1/2

01

4 4 7

10

1/2

01

5 4 7

10

1/2

01

6

CONSUMER PRICE INDEX(in %)

Year-on-year Month-on-month Inflation rate



Balance of Payments

Initially current account deficit (caused by a balance of trade deficit) compensated by inflow of foreign capital.

Pro-export effect of investment helped the balance of trade with goods to become positive (since 2005).

But the current account as a whole remained in red numbers due to negative income balance (includes the outflow of dividends and reinvested earnings).

On the other hand inflow of foreign capital is one of the major causes of the raise of external debt.

High share of FDI is being financed from reinvested earnings from previous investments.


Balance of Payments

-7,0

-6,0

-5,0

-4,0

-3,0

-2,0

-1,0

0,0

1,0

2,0

-300,0

-250,0

-200,0

-150,0

-100,0

-50,0

0,0

50,0

100,0

150,0

200,0

250,0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

%

CZK

bn

.

CURRENT ACCOUNT, TRADE BALANCE AND BALANCE OF SERVICES

Trade Balance Balance of Services Current Account Current Account/GDP (right-hand scale in %)

Source: CNB, graph MIT, Department of Economic Analyses


External Debt

0,0

500,0

1000,0

1500,0

2000,0

2500,0

3000,0

3500,0

1.3

.20

00

1.8

.20

00

1.1

.20

01

1.6

.20

01

1.1

1.2

00

1

1.4

.20

02

1.9

.20

02

1.2

.20

03

1.7

.20

03

1.1

2.2

00

3

1.5

.20

04

1.1

0.2

00

4

1.3

.20

05

1.8

.20

05

1.1

.20

06

1.6

.20

06

1.1

1.2

00

6

1.4

.20

07

1.9

.20

07

1.2

.20

08

1.7

.20

08

1.1

2.2

00

8

1.5

.20

09

1.1

0.2

00

9

1.3

.20

10

1.8

.20

10

1.1

.20

11

1.6

.20

11

1.1

1.2

01

1

1.4

.20

12

1.9

.20

12

1.2

.20

13

1.7

.20

13

1.1

2.2

01

3

1.5

.20

14

1.1

0.2

01

4

1.3

.20

15

1.8

.20

15

EXTERNAL DEBT

Government sector Bank sector Business sector Total



Foreign Direct Investment


0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

INWARD FOREIGN DIRECT INVESTMENT (mil. USD)



0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

Germany Cyprus Luxembourg France Poland Belgium Korea Italia Hungary Sweden Slovakia

INWARD FOREIGN DIRECT INVESTMENT BY COUNTRIES 2014 (mil. USD)




0,0

5 000,0

10 000,0

15 000,0

20 000,0

25 000,0

30 000,0

35 000,0

40 000,0

FOREIGN DIRECT INVESTMENT AS OF 31 DECEMBER 2014 (mil. USD)





-1 000

0

1 000

2 000

3 000

4 000

5 000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

OUTWARD FOREIGN DIRECT INVESTMENT(mil. USD)


Government Deficit/Surplus and Debt

-10,0

0,0

10,0

20,0

30,0

40,0

50,0

-500,0

0,0

500,0

1000,0

1500,0

2000,0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

GENERAL DEBT AND BALANCE OF BUDGET

Balance of Budget (CZK bn) General Debt (CZK bn) % Balance of GDP % GD of GDP



Industry

Industrial production fell by 13.6% in 2009, then, after two years of growth, decreased again in 2012 by 0.8% and in 2013 by 0.1%.

Growth was restored in 2014 (5%) and roughly at the same pace continued in 2015 (4.4%), in January to February 2016 growth 3.5%.

The decisive share of the automotive industry (28.4% of overall industrial production in 2015). Its growth has a positive effect on other supply sectors.

New orders increased by 5.9% y/y in 2015 , non-domestic by 8.0% and domestic by 2.1%.In January to February 2016 new orders increased by 1.7% of which non-domestic by 3.1%, while domestic fell by 1.2%.

Further development of the sector will largely depend on demand for vehicles, but also on the development of other industries in the partner countries.

The growth rate of the Czech industry in 2016 is expected to reach 4%.


Industry

-15,0

-10,0

-5,0

0,0

5,0

10,0

15,0

0,0

20,0

40,0

60,0

80,0

100,0

120,0

140,0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 1-2/2016

INDUSTRIAL PRODUTION(bn. CZK)

(average 2010 =100) (year-on-year change in %)



Industry

-60,0

-40,0

-20,0

0,0

20,0

40,0

60,0

20

07

/1 3 5 7 91

12

00

8/1 3 5 7 91

12

00

9/1 3 5 7 91

12

01

0/1 3 5 7 91

12

01

1/1 3 5 7 91

12

01

2/1 3 5 7 91

12

01

3/1 3 5 7 91

12

01

4/1 3 5 7 91

12

01

5/1 3 5 7 91

12

01

6/1

INDUSTRIAL PRODUCTION(annual change in %)

Industry, total Manufacture of computer, electronic and optical products

Manufacture of electrical equipment Manufacture of motor vehicles, trailers and semi-trailers



Industry

-40,0

-30,0

-20,0

-10,0

0,0

10,0

20,0

30,0

40,0

20

08

/1 3 5 7 9

11

20

09

/1 3 5 7 9

11

20

10

/1 3 5 7 9

11

20

11

/1 3 5 7 9

11

20

12

/1 3 5 7 9

11

1/2

01

3 3 5 7 9

11

1/2

01

4 3 5 7 9

11

1/2

01

5 3 5 7 9

11

1/2

01

6

INDUSTRIAL OUTPUT AND NEW ORDERS (y-o-y changes in %)

Industrial Output New Orders



Industry

-25,0

-20,0

-15,0

-10,0

-5,0

0,0

5,0

10,0

15,0

20,0

25,0

30,0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 1-2/2016

NEW INDUSTRIAL ORDERS(y-o-y change in %)

New Orders in Industry Non-Domestic New Orders in Industry Domestic New Orders



Industry

70,0

75,0

80,0

85,0

90,0

95,0

PRODUCTION CAPACITY UTILIZATION IN MANUFACTURING INDUSTRY(in %)



Foreign Trade (Cross-border concept)

Trade balance (cross-border concept) reached surplus of CZK426.3 billion in 2015, which was by CZK 2.9 billion lowercompared to previous year.

Exports grew by 7.5% and imports by 8.6% in 2015 (y/y).

Strong reliance on manufacturing industry (55.5% share of machinery and transport equipment in 2015) and on exports to EU-28 (83.3% of total exports in 2015).


Foreign Trade (Cross-border concept)


-30,0

-20,0

-10,0

0,0

10,0

20,0

30,0

40,0

50,0

60,0

-30,0

-20,0

-10,0

0,0

10,0

20,0

30,0

40,0

50,0

60,0

20

08

/1 3 5 7 9

11

20

09

/1 3 5 7 9

11

20

10

/1 3 5 7 9

11

20

11

/1 3 5 7 9

11

20

12

/1 3 5 7 9

11

20

13

/1 3 5 7 9

11

20

14

/1 3 5 7 9

11

20

15

/1 3 5 7 9

11

20

16

/1

FOREIGN TRADE WITH GOODS(current prices, exports and imports y-o-y changes in %, balance in CZK bn)

Balance Export Import


Export by Commodity (%)

44,5

25,4

7,1

12,5

3,17,0

2000

Machinery and transport equipment

Manufactured goods classified chiefly by material

Chemicals and related products, n.e.s.

Miscellanous manufactured articles

Mineral fuels, lubricants and related materials

Others

55,5

15,8

6,2

12,2

3,07,3

2015






Others



Import by Commodity (%)

40,0

20,8

11,2

10,3

9,7

8,0

2000






Others

45,3

17,2

11,4

11,0

6,7

8,4

2015






Others



Export by Countries (%)

40,5

7,76,0

5,4

4,3

36,1

2000

Germany Slovakia Austria Poland United Kingdom Others

32,3

9,0

5,85,3

5,1

42,5

2015

Germany Slovakia Poland United Kingdom France Others



Import by Countries (%)

32,3

6,5

6,0

5,24,9

45,1

2000

Germany Russia Slovakia Italy Austria Others

26,0

13,4

8,05,1

4,1

43,4

2015

Germany China Poland Slovakia Italy Others



Thank you for your attention

Ministry of Industry and Trade Na Františku 32, Praha 1www.mpo.cz

czech economy 2015 · strong business and ownership relations to the eu. big portion of...

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