2018 OECD Economic Surveys: Czech Republic 2018

image of OECD Economic Surveys: Czech Republic 2018

The economy of the Czech Republic is thriving, growth is high, unemployment rate is low and fiscal stance is positive. Strong demand from the external sector and household consumption boosted by high increases in wages are driving growth. However, labour productivity remains low contributing to maintaining low wages. Deeper structural reforms and investment in skilling, education, R&D and innovation are needed to support further convergence towards OECD standards.


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Key policy insights

Since the early 1990s, the Czech Republic has progressed successfully towards the average OECD incomes. Building on its geographical location and strong industrial base, the country has opened its markets and attracted foreign direct investments. Following the Velvet Revolution in 1989, the economy has become highly integrated in global value chains. Growth has been strong, though volatile. Following slow growth in the wake of the 2007 financial crisis, the Czech Republic has resumed its convergence towards OECD and EU average incomes. The economy is thriving, driven by internal and external demand. Per capita GDP reached 82% of the OECD average in 2017 or 88% of the EU average ().



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