Export markets Czech Republic: Economy shall become Exemplar of Europe

Von Stéphane Itasse

Czech Republic has started with a bang in the current fiscal year: According to the data of the Statistical Office ČSÚ, the gross domestic product has grown in the first quarter by 2.9 % than the previous year, in the second quarter by 4.4 %.

The Czech industry, in particular the automotive construction, currently records high growth rates.
The Czech industry, in particular the automotive construction, currently records high growth rates.
(Photo: VW)

The Czech economy thus has grown in the second quarter of 2015 as never before since the fourth quarter of 2007. Also compared to Europe, the eastern neighbor of Germany is good: In this period, no other economy in EU has grown so fast. The growth is contributed by the following according to the data: one-third by the consumer demand and two third by investments, in particular by the money from structural funds of EU.

Czech Republic has thus overcome its recent economic recession. In the years 2012 and 2013, the economy contracted by 0.9 and 0.5 % respectively; there was again a growth by 2 % only in 2014. With these figures, the country was rather weak as compared to East Europe according to Eurostat-data; only in Slovenia, the economy developed worse.

German investors keen about the location Czech Republic

Also the foreign investors are satisfied. According to the recent economic survey of German-Czech Chamber of Industry and Commerce (DTIHK), 92 % of the companies would invest again in Czech Republic. With this declaration of belief in the investment location, the surveyed investors, mainly Germans, set a record. Thus, the trend of 2014 is confirmed: The Czech economy has permanently outpaced the trough. Two third of the surveyed companies evaluate the current economic condition in Czech as satisfactory, 29 % find it even better, as reported further by the Chamber. Thus, the value has almost doubled as compared to the previous year. At the same time, the proportion of companies, which evaluate the condition as worse, has decreased significantly and is currently only at 7 %. In the previous year, almost one fifth had evaluated the economic condition as "worse".

The companies were more cautious than the previous year was the fact that concerned the expectation of a further economic recovery. 33 % (2014: 41 %) expected better prospects for the course of the year. For this purpose, significantly more surveyed persons would view a stable development with two third, and only 4 % – as low as never before – feared a worsening.


Export from Czech Republic increased promisingly in 2015

"Even the export, which constitutes the maximum share of the turnover for many German companies, increased promisingly in 2015. This is a good news", said DTIHK-Managing Director Bernard Bauer. 40 % of the companies expected increased export turnover; however, it was approximately one third in 2014 according to the Chamber. Currently, half of the persons surveyed assume a stable goods export.

From the perspective of the investors, there are n-number of good reasons for the location Czech Republic, as reported by DTIHK. In addition to the proximity to Germany and EU-membership, this includes the productivity and commitment of employees, the local suppliers and relatively moderate labour costs and a solid academic training.

On the contrary, the problamatic factors include corruption, insufficient transperancy of public procurement, the partially dramatic and poor availability of qualified employees and the tax system. The Czech economy receives impetus from the industrial production, which increased in the first quarter of 2015 by almost 5 % than the previous year, in August by 6.3 %. This is particlulay important for the country: "The automobile industry and the mechanical engineering industry produce approximately one third of our gross domestic products", said the minister of economic affairs Jan Mládek. According to the Statistical office, the production of vehicles and trailers, metal goods and rubber- and plastic products increased sharply. The volume of industrial contracts increased in August by 7.9 % than the previous year. According to the information of the authorities, the foreign orders increased by 12.5 %; on the contrary, the orders from home market decreased by 0.7 %.

Germany and Czech Republic cooperate with Industry 4.0

Industry 4.0 is at the topmost position in the agenda for the most important planned topics in Czech Republic. The German Federal Ministry of Education and Research (BMBF) and Ministry of Trade and Industry of Czech Republic (MPO) have agreed upon cooperation Industry 4.0, as reported by DTIHK. A mutual MoU was signed in Prag by the ministerial director Prof. Wolf-Dieter Lukas and Vice minister Tomáš Novotný. Thus, Czech Republic is the only country, with which Germany has agreed upon a concrete collaboration for this planned topic.

According to the notification of the chamber, the ministers have planned "to create a framework for initiating concrete cooperation in the areas research, development and innovation regarding the topic Industry 4.0", i.e. in the mutual MoU. The concrete procedure for implementing the innovation dialog should be determined promptly in consultations. Till the end of the year 2015, both the ministers want to name representatives from science, economy and administration, who are included in the innovation dialog.

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