2008 OECD Economic Surveys: Czech Republic 2008

image of OECD Economic Surveys: Czech Republic 2008

This edition of OECD's periodic survey of the Czech economy finds strong growth and manageable inflation. It addresses a number of key economic challenges including ensuring fiscal sustainability, improving the labour supply, and  harnessing globalisation.

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Recent developments and policy challenges

This first chapter of the OECD’s Economic Survey of the Czech Republic looks at recent economic developments and policy challenges in sustaining a healthy pace of growth for the future. Growth has picked up significantly since the early 2000s and is improving catch up with other OECD economies. Manufactured exports and foreign direct investment are continuing to play a key role in the economy – this is followed-up in Chapter 4, which looks at the implications of globalisation for the Czech economy. So far, the rapid pace of economic activity has not raised underlying inflation. However, headline inflation is being hiked up by international market developments and policy measures, notably increases in indirect taxation. Even though last year’s government deficit has turned out below the level needed for entry to the euro area, ensuring fiscal sustainability is nevertheless an important policy challenge, and is followed up in Chapter 2. The second main policy challenge is widening labour supply and deepening skills, which is examined further in Chapter 3. The final sections of this chapter update developments in business, competition and the environment policies.

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