czech republic

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In-depth Business Intelligence 

Key Economic Data 
  2003 2002 2001 Ranking(2003)
Millions of US $ 85,438 69,590 56,800 39
GNI per capita
 US $ 6,740 5,560 5,250 66
Ranking is given out of 208 nations - (data from the World Bank)

Books on Czech Republic


Area ( 





Vaclav Klaus

Private sector 
% of GDP 

Update No: 093 - (28/01/05)

Havel bows out
An era ended exactly one year ago in February 2003, when Vaclav Havel's term as president came to an end. The dissident playwright in communist times had spearheaded the velvet revolution in 1989 and was the first president of post-Communist Czechoslovakia. His presidency was interrupted for only a few months at the time of the separation of the Czech Republic and Slovakia, which borders the Czech Republic to the south, in 1993, engineered by the Slovak strongman, Vladimir Meciar, a notorious thug. 
Mr Havel saw the ghost of former Soviet military influence exorcized in 1999, when the republic was granted full membership of NATO. He left office having led it to the threshold of the EU. His old rival and successor as president, Vaclav Klaus, oversaw the country's accession to the union. The formal invitation to join the EU came despite criticism of policies towards the Roma, or Gypsies, who number up to about 300,000 and who suffer disproportionately high levels of poverty, illiteracy, and unemployment. 
The Czech Republic has not steered clear of controversy in international relations since independence. The firing up of the Temelin nuclear power plant sparked a major row with Austria in 2000, while the republic's refusal to revoke the post-war Benes decrees which sanctioned the expulsion of over two and a half million ethnic Germans and Hungarians has strained relations with neighbours.
The Senate has voted to extend the country's mission in Iraq until February 2005. Around 100 Czech military police officers are currently deployed in the country.
The governing CSSD has trailed the Civic Democratic Party (ODS) and the Communist Party of Bohemia and Moravia (KSCM) in recent voting intention polls. The next election to the Chamber of Representatives is tentatively scheduled for June 2006.

Two oldsters of Czech politics
There is now no love lost between the former president and his successor, Vaclav Klaus. In the early days of his presidency, Havel fostered Klaus's rise in parliament, but the two men developed very divergent views on entry into the EEC and, since Klaus gaining the Presidency, the animosity between them has only sharpened. Klaus, unlike Havel, is no staunch advocate of consensual democracy. In 2001, he was thrust into the headlines when reporters at the state-run Czech Television went on strike to protest the appointment of close Klaus associates into key positions at the station. Renegade reporters took over the newsroom and lambasted the flagrant cronyism and over 250,000 people protested in Wenesclas Square. 
To many, Klaus is a worrisome figure in contemporary Czech life; a numbers-man, a wheeler-dealer and an un-reformable egotist. One of his first acts as the newly elected President was to publish a self-serving autobiography before any recognizable presidential style could be ascertained. Klaus, an admirer of Thatcher, is a Eurosceptic, whose Atlanticism did not prevent him from being critical of the war in Iraq.
Havel's place in all the cultural and political changes now reshaping the Czech Republic is somewhat problematic. At 68, he is too young simply to fade into the woodwork, but too ill (having had lung cancer) and powerless to be an active political force. He is gradually making that subtle transition from politician to statesman. (A presidential library, in the tradition of American presidents Kennedy, Nixon and Reagan, is actively being organized for him.) Among artists and intellectuals, after acknowledging his enormous contribution to the country's liberation from the Soviets, his standing as a playwright tends to be disparaged. But one conveniently forgets that it is the length and breadth of his personal sacrifice which made it possible for new generations of writers to emerge. Although young and innovative artists are always crowding through the open door, somebody had to be there to open that door in the first place. 

The new young figure in Czech politics, Stanislav Gross
Premier Vladimir Spidla's decision to step down in the wake of his party's poor performance in the European elections in June last year led to a collapse of his government, after alienating many traditional left-wing voters with a series of unpopular public finance reforms. On Jul. 1, Spidla resigned from his post following a poor showing from his party in the Jun. 13 elections to the European Parliament.
Skipping a generation, Stanislav Gross formed a government, with the centrist Christian Democrats (CSSD) and the rightist Freedom Union. In the June 2002 ballot, the CSSD elected 70 lawmakers to the 200-member Chamber of Representatives. 
President Klaus appointed the CSSD interim leader Stanislav Gross as prime minister on Jul. 26. Gross, who had acted as the country's interior minister, now leads a coalition government, which also includes the KDU-CSL and the Freedom Union - Democratic Union (US-DEU). At the age of 34, Gross has become the youngest prime minister in the history of the Czech Republic. The coalition has a narrow majority of 101 seats in the 200-seat lower house and faces many challenges. "I feel a great responsibility, and take this very personally. I will try not to disappoint," Gross said at the time of his nomination. 
Gross entered parliament in 1992 at the age of 22, two years after becoming leader of the Young Social Democrats. He served as interior minister since 2000. 
Mr Gross, who has also taken over as head of the ruling Social Democrat Party, is a popular politician. But he is facing an extremely difficult, not to say daunting, task. Mr Gross has only one extra vote to count on in securing a majority in parliament and presenting a viable government alliance. Mr Gross wants to sustain his government until the 2006 elections, while avoiding any compromising reliance on communist support. 

Czech Civic Democrats Remain Well Ahead 
The Civic Democratic Party (ODS) in opposition, nevertheless, remains the most popular political organization in the Czech Republic. According to a poll by STEM, 34.1 per cent of respondents would vote for the ODS in the next parliamentary election.
The Communist Party of Bohemia and Moravia (KSCM) is second with 16.1 per cent, followed by the governing Czech Social Democratic Party (CSSD) with 15.6 per cent, and the Christian and Democratic Union - Czech People's Party (KDU-CSL)- with 8.1 per cent. 
The Czech Republic will hold a nationwide referendum on the European Constitution by June 2006, possibly along with parliamentary elections. Prime minister Gross supports the ratification of the proposed body of law. On Dec. 2, Klaus said the document would "endanger freedom, democracy and prosperity."

Consumer surge in spending
Czech retail sales surged 8 per cent year-on-year in November 2004, the statistical office said on January 17th. The November figures were well above expectations for a rise in retail sales of around 6 per cent. In October, sales were up just 1.3 per cent.
Analysts said the figures pointed to robust consumer demand in the run up to Christmas but did not necessarily herald a strong pick up in the wider economy.
The Czech gross domestic product is rising strongly by European Union standards but lags the other seven former communist countries which joined the European Union in May last year. Economic growth in the third quarter, the latest period for which data is available, was 3.6 per cent year-on-year. 
Neighbouring Poland posted year-on-year GDP growth of 4.7 per cent in the same period. Slovakia posted year-on-year GDP growth of 5.3 per cent.

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Tatra truckmaker stays cool on higher sales result

Tatra Koprivince, the Czecg truckmaker, posted 47m Czech crowns profit on sales of 2.7bn crowns in January-September, Interfax News Agency reported.
In third quarter of 2003 Tatra lost 631m crowns. The company said that while the number represents an important turnaround, it does not want to overestimate the results. Tatra sold 1,119 lorries in the third quarter of 2004, up by 129 year-on-year. In may Tatra officials predicted the company would produce 2,200 trucks in 2004. Sales were up 39% year-on-year, exports accounted for 80% of sales.
Tatra said it has managed, in part, to avoid the effects of the strengthening crown against the US dollar by raising Euro sales. The company also attributes the profit to savings after a restructuring following the entry of the US company Terex, which cut overhead by 3%. The truckmaker intends to consolidate production and sign contracts on the supply of components from external suppliers. It also plans to lease out some facilities to subcontractors.

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More passengers flying with Czech Airlines

Czech Airlines (CSA) transported over four million passengers last year, 11% more than in 2003, CSA spokeswoman, Jitka Novotna, said recently, Interfax News Agency reported. Novotna attributes the growth to CSA's 10 new destinations in Europe and Asia. CSA has also increased its number of flights and now offers two or more flights per day to most common destinations. CSA flies to nine German cities, offering up to three flights a day between Prague and Frankfurt. CSA flies seven a day to London's three main airports, she said. This year CSA expanded its fleet, adding a record 10 new planes. In January-October CSA transported 3.74m passengers, up 22% year-on-year. The number of take-offs and landings grew 19% to 27,000. Originally, CSA expected this Year's profit to reach 600m crowns, compared to 70m crowns in 2003.

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Prague to issue bonds in 2005

The Czech state will issue bonds worth 17bn Czech crowns in the first quarter of 2005, the Finance Ministry said recently, Interfax News Agency reported. 
The bonds will be used to finance the state budget deficit. The state will also issue short-term treasury bills (T-bills) worth 64bn crowns, of which paper worth 46bn crowns will be put up for auction, the ministry said.
The maturity of the crown-denominated bonds will range between three and 15 years so that the instalments do not pose a major burden in any one period. In mid-October, the Czech parliament approved the 2005 state budget draft with a deficit of 83.6bn crowns. This year, the state plans to issue bonds worth 118bn crowns to cover the state budget deficit. Including Eurobonds, the total will be near 165bn crowns.

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BorsodChem-MCHZ sees sales rising 42% in 2004

Czech chemicals maker BorsodChem MCHZ, a subsidiary of Hungary's BorsodChem, expected its sales to rise 42% to 3.7bn Czech crowns last year, CEO Alexander Palffy, New Europe reported recently. 
Operating profit should grow by nearly 8% to 185.8m crowns, while net profit will drop to 143.7m crowns, representing an annual decline of 21% versus 2003 when the firm had extraordinary revenues from the sale of its adhesives and formaldehyde production unit and some intangibles, Palffy explained.
The firm expected its sales to rise mainly thanks to growth in aniline production to a record 112,500 tonnes last year, as well as growth in sales to the Hungarian parent company, Palffy was quoted as saying. The volume of exports to Hungary increased 53% to nearly 1.5bn crowns, accounting for 36.3% of the firm's total exports. The rest headed for Slovakia, Switzerland and Germany, with sales in the Czech Republic accounting for only 2.8% of the firm's production.
BorsodChem MCHZ cut staff by 60 to 599 during the year. Most of those who lost their jobs were transferred to the OKD-Doprava company after the first quarter, where the firm moved some of its activities, Palffy noted.

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CEZ eyes foreign acquisitions

Czech power utility CEZ expects to create financial resources worth three billion Euro over the next five years to be used for possible foreign acquisitions, the company said in a recent report provided to the Prague Stock Exchange (BCPP). CEZ's overall indebtedness should not exceed 30 per cent, CEZ spokesman, Ladislav Kriz, said. He said the actual use of these financial resources will depend on eventual opportunities. At the same time, CEZ must retain its ability to finance extensive investments in the renewal of Czech coal resources after 2010. This investment programme, CEZ would also consider the construction of new power plants outside the Czech Republic, or participation in such projects.

CEZ wants 3 Bulgarian power plants

Czech power utility CEZ has joined 13 companies expressing preliminary interest in three Bulgarian coal-fire power plants, CEZ spokesman Ladislav Kriz told Interfax recently. Kriz said eligible investors will be asked to submit their offers in March 2005. Other interested parties reportedly include Germany's E.ON Energie and Stadtwerke Leipzig GMgH, Austrian EVN AG, Greek Public Power Corporation AE, Italy's ENEL, Britain's International Power, France's Dalkia, Japan's J Power, Belgium's Unit International SA, and India's National Thermal Power Corp. The three tenders can be won by one investor or by different companies, according to the privatisation agency.

Skodaexport wins Argentina tender

Czech engineering firm Skodaexport has won an order to supply two thermal power plant units to Argentina, Hospodarske noviny reported. The construction of the first of two units of the Rio Turbio thermal power plant in southern Argentina, worth 800m Czech crowns, should be completed in 2007. Two Skoda steam turbines have been operating in the Rio Turbio coal mine since 1962. The second unit should follow with the modernisation of the Rio Turbio mines and railway reconstruction. The Czech Export Bank (CEB) will finance the deal, according to Skodaexport's Zdeneck Sima. Skodaexport plans to cooperate with Czech firms on supplies for the project.

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Czech foreign trade results best in 10 years

In November 2004, for the first time in10 years, the Czech Republic exported more from the country than imported into it. This is good and surprising news for the Czech Republic, Czech Radio 1 reported. 
Foreign trade was faring well and it ended at a surplus of over 5bn korunas. In view of the nature of the economy the good result is very important for the healthy development of the economy as a whole. Reporter, Jitka Hanzlova, was trying to find the reasons for the success: The year-on-year increase in export grew in standard prices by 33 per cent, while import by only 20 per cent. "This is the best result in the last 10 years and it surprised both analysts and statisticians," she said. Kamil Kudlak, the head of the analysis section at the Statistical Office, said the favourable foreign trade result was mainly due to record exports of computers, TV sets and cars. "Electro-technical and car companies confirmed to us exceptional results," Kudlak said. "These firms are mainly firms owned by foreign investors."
However, Industry Deputy Minister, Martin Tlapa, believes that small and medium-size businesses also played an important role. "They coped well with our EU entry. I believe that this continues to indicate a good balance between the quality of what we can offer and the production cost in the Czech Republic," Tlapa said.
Patrik Rozmbersky, an analyst with Zivnobanka, pointed out that exporters were successful in spite of the fact that west European economies stagnated and prices of Czech goods, resulting from the ever-stronger koruna, kept growing. The effect of the country's EU entry thus kept playing an important role.

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