Transcript CZECH REPUBLIC 2004

PhDr Vlastimil Cerny, CSc, MA
Head of the International Office
Faculty of Economics and Management
Czech University of Agriculture Prague
[email protected]
Phone/fax+420.234381804
CZECH REPUBLIC 2006
(a small country in the centre of Europe)
Area:
Population:
GDP per capita:
78,886 sq.km
10,211 million
19, 300 USD (based on Purchasing Power Parity
37th place in the world)
Average monthly wages 20, 600 CZK (726 EUR, PPP 1,8 = 1,306 EUR)
Exchange rates
1 USD=23,688 CZK; 1 EUR=28,36 CZK;
1GBP=41,219 CZK (February 10, 2006)
Strong industrial base and skilled workforce
Capital City Prague
Capital City Prague
Centre of Czech national life since 9th century
European “capital” 1348-1420 & 1560-1618
Provincial city of Austrian Empire -18th and
19th centuries
Fairy tail medieval architecture (not destroyed
by wars or modernizations)
Prague GDP - 219 % of the whole country,
157% of the EU average, together with Central
Bohemia, Prague region generates 62% of the
Czech GDP
Historic framework
Celts in the area (600 BC-200 AD) – first name of the country
Bohemia
Germanic tribes (200 -500 AD)
Arrival of Slavs in the 5th century, Slavic people dominate the
area
863 – Christianity
995 –unification of Czech lands into Czech state
Prague as a seat of Roman Kings and Emperors 1346-1420 &
1560-1618
Tragedy of the Thirty years war (1618-1648)
Industrial development in the 19th and 20th centuries
Higher living standard than in Germany or Switzerland before
World War II
Soviet block country 1948-1989
EU member 2004
Percentage
GDP growth (at 1995 constant prices)
6
5
4
3
2
1
0
-1
-2
5
4,3
3,9
3,7
4
4,6
2,6
1,2
-0,7
1,5
-1,1
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
prediction
55 % of GDP is created by foreign owned companies
In 2005 their total revenues increased yearly by 13.4%
The growth is sound – it is driven by the investments and
growing exports
The growth applies mostly to big companies with foreign
participation, small companies with less than 25 employees have
stagnated for years – they don’t earn money and can’t invest
2005 GDP was higher by 16% of the Czech GDP before
transformation in 1989
In 2005 Czech Republic overtook in GDP per capita the poorest
country of the old 15 EU countries (Portugal – 71.4% of EU
average), reaching 73% of EU average
Agriculture, Fishing 3%
GDP Structure
Industry 27%
19%
3%
Construction 7
28%
13%
7%
4%
9%
17%
Trade, Repairs, Hotels,
Restaurants 17%
Transport, Storage,
Communication 9%
Financial Intermediation 4%
Business Services 13%
Other Services 19%
•Strong position of “old economy” alongside of “knowledge based economy”
•The direct share of Tourism on GDP is 3,5%, but including the additional assets of the
connected sectors (goods, services, construction) – up to 12%
Inflation rate
12
10
10,7
8,8
8
8,5
6
4,7
4
3,1
3,9
2
0
-2
1996
1997
1998
1999
2
1,8
2,1
2000
2001
2002
-0,1
2003
2004
The cumulative inflation since 1989 was 415 % - first
transformation years were marked by hyperinflation.
2005
Inflow of FDI
Inflow of Foreign Direct Investment in the Czech Republic (mil EUR)
10000,00
9012,00
8850,00
8000,00
6296,00
5933,00
5404,00
6000,00
3596,00
4000,00
3317,00
1152,00
1982,00
2000,00
1140,00
734,00
559,00
2289,00
0,00
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
The CR is one of the most successful transition economies in attracting foreign direct
investment
Inflow of FDI since 1993 was more than EUR 48 bn
Ireland received from 1990 to 2003 over 176 bn EUR in FDI
Competitive advantage of the Czech
Republic for investors
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Qualified and inexpensive labour
Macroeconomic and social stability
Accessibility of lucrative European markets
Investment incentives of Czech government
Relatively good infrastructure
Moderate property and land price
Growing prosperity of the country
External trade
2004 Growth
32.8%
19.2%
Exports
Imports
2005 Growth
11%
6.1%
86.3 % Exports to the EU
71.4 % Imports come from the EU
Czech exports growth in 2004&2005 - the biggest among EU countries
Trade Balance
2004
2005
2006 prediction
-0.705 bn EUR
+ 1.135 bn EUR +2.5 bn EUR
Main Exports partners Main Imports partners
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•
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Germany 36.2%
Slovakia 8.5%
Austria 6.0%
Poland 5.3%
UK 4.7%
France 4.6%
Italy 4.3%
Netherlands 4.3%
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Germany 31.7%
Slovakia 5.4%
Italy 5.3%
China 5.2%
Poland 4.8%
France 4.7%
Russia 4.1%
Austria 4.0%
Foreign Investment in Central and Eastern Europe
Real Estate Market
Country
2004 (million of
EUR)
Country
2005 (million of
EUR)
Czech Republic
1240
Czech Republic
745 first half of year
Hungary
900
Hungary
Poland
560
Poland
Russia
250
Russia
Slovakia
90
Slovakia
Romania
60
Romania
Czech Republic represents cca 24% of 2005 transactions in CEE and Russia
Prague market continues to be viewed as a low risk investment
Source: Jones Lang LaSalle
FDI stock per capita in Central Europe by the end of 2003
Poland
1360USD
Slovak Republic
1950USD
Czech Republic
4100USD
Hungary
3730USD
In absolute terms, In Central and Eastern Europe Czech Republic is on the 2nd
place after Poland and before Russia.
FDI INFLOW INTO THE CZECH REPUBLIC
BY COUNTRY
FDI INFLOW INTO THE CZECH REPUBLIC
BY SECTOR
Irish presence in the CR
• Some 60 Irish owned companies operating in the CR
(Mergon International in Brno, Connacht Electronics in
Humpolec, Norkom Technologies, Mouldpro, Finglas,
Waterford Glass)
• A twofold increase compared to 5 years ago
• Huge Irish involvement in property development (Four
Seasons and Hilton hotels, Kotva department store –
Markland)
• Irish-based subsidiaries of multinational companies expand
to CR (Flextronics International, ALPS Electric)
• Only 1% of Irish exports went to the new member states in
2004
EURO Adoption Prospects
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•
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All Maastricht single currency criteria fulfilled in 2004 and 2005
2005 annual state deficit
2,7 % (M 3,0 %)
2005 Inflation
2,0 % (M 3,1%)
Overall public debt
37 %
(M 60)
Local interest rate
2%
ECB 2.25
• Government plans to adopt the single currency by January 1, 2010
• Czech drive to meet the Ma--cht criteria cost the country faster growth
• Specialists argue that adopting EURO in 2010 could be a source of
economic depression (different economic cycle, different structure of
Czech economy, low flexibility of Czech labour market)
Labour market
• The percentage of employed population is
• Unemployment
54.3%
8.9%
Ratio of those employed in various sectors
Agriculture
3.9%
Manufacturing and Industry
39.6%
Services
56.5%
At-risk of poverty rate (lowest in EU)
8%
(60% of the national median disposable income, for IR-21%)
Czech Agriculture
2004
Share of agriculture of GDP
3,1%
Number of workers
139 000 (-6% in 2004)
Share of agricultural employment 3,9%
Agrarian foreign trade balance
-30 bn CZK
Farmland total 4,27 m ha
Arable land 3,06 m ha
Set aside land 177 000 ha
1990
7.32%
513 500
9,5%
-2,9 bn CZK
Farm structure
Individual private farms
Cooperatives
Farming & trading companies
Others, including state owned
32 496
686
2 336
174
93% of the country’s farm land is leased
In 2004 the annual rent increased by 28 % to 1000 CZK/ha ,
the rents will inevitably continue to grow
Czech Agriculture’s results in 2004
• Best year since 1989 - net profit for the sector4 bn CZK
• The value of Czech gross agricultural production up 25 % on last
year
• Subsidies (25%of EU level from EU+the same as top-ups) 22 bn
CZK
(Czech top-up maximum authorised by the Czech treaty of
accession is 30%)
• Czech net trade deficit in agri-food products grew by 5 bn CZK
(20 %) on last year
• Number of workers decreased by 6 %
• Grain production is 2 m tonnes in excess of domestic demand
Threats to farm incomes in the future
• Inputs are to increase - labour costs
- agricultural rents
• Czech food processing exports are not
successful (image problems)
• Exports of raw materials (pigs, milk, etc) is
not able to overcome that disadvantage)
Chosen conditions from the Accession Treaty and the 2002 situation
Units of
measure
Index
Crops area on arable land – claim to direct payments
Reference yield / factual yield
Milk (supplies, direct sales)
National
quota
Situation in
2002
ha
2,253,598
2,163,463
t / hectares
4.20
4.33
l/t
2,682,143
(for year 2006 reserves 55 788)
Total
2,737,931
2,612,274
%
4.21
3.98
Cows without market production of milk
pcs
90,300
100,333
Special bonus of cattle 1)
pcs
244,349
210,320
Slaughter bonus of cattle -adults
pcs
483,382
360,766
Slaughter bonus of cattle -calves
pcs
27,380
14,098
Sugar - total 2)
t
454,862
548,000
Starch
t
33,660
35,970
Flax – long fibre
t
1,923
2,138
Flax – short fibre
t
2,866
2,185
head
66,733
56,081
Dried fodder 2)
t
27,942
26,542
Processed fruit and vegetables - tomatoes
t
12,000
7,420
- peaches
t
1,287
181
- pears
t
11
9
Milk fatness
Sheep
Beer sales, 2002
from retail outlets, litres per person
Source: Euromonitor
Czech Republic
179,5
Ireland
136
Denmark
120
New Zealand
92
Finland
81
Germany
80
Austria
66
Slovakia
66
Venezuela
66
United States
64
Portugal
63
Sweden
61
European City Monitor 2004 – Cushman&Wakfield
The best cities to locate a business today
Senior executives from 500 European companies gave their views on Europe’s leading business cities.
City
Rank
1990* 2003
Weighted
score
City
2004
Rank
1990* 2003
Weighted
score
2004
London
1
1
1
0,85
Lisbon
16
15
16
0,11
Paris
2
2
2
0,63
Geneva
8
14
17
0,1
Frankfurt
3
3
3
0,34
Dusseldorf
6
16
18
0,1
Brussels
4
4
4
0,28
Hamburg
14
20
19
0,09
Amsterdam
5
5
5
0,27
Warsaw
25
22
20
0,09
Barcelona
11
6
6
0,26
Lyon
18
19
21
0,07
Madrid
17
7
7
0,22
Vienna
20
24
22
0,07
Munich
12
10
8
0,19
Budapest
21
23
23
0,07
Berlin
15
8
9
0,18
Glasgow
10
21
24
0,07
Zurich
7
11
10
0,16
Rome
-
26
25
0,07
Milan
9
9
11
0,15
Copenhagen
-
25
26
0,07
Dublin
-
12
12
0,14
Moscow
24
28
27
0,04
Prague
23
17
13
0,12
Helsinki
-
29
28
0,04
Manchester
13
13
14
0,12
Athens
22
30
29
0,03
Stockholm
19
18
15
0,11
Oslo
-
27
30
0,03