czech pavilion at 2010 expo - MZV ÄŒR

ECONOMIC POLICY
Czech Industry: From Peak To Bottom and From Bottom Up
The Czech Republic’s economic
development has been recording
an improvement in the last months,
according to assessments by economists
and analysts. Compared to
the commentaries and uncertainty of
6 - 9 months ago, we are now miles
away. The Czech economy has rebounded
and is moderately growing.
What do we owe this rebound to?
A look at the regularly published monthly
indicators shows that, besides the leading indicators
of confi dence, an improvement is recorded
especially in foreign trade and industry.
Even without a detailed analysis of the causes,
it can be said that industrial production in the
Czech Republic is closely linked with foreign
trade, in both exports and imports. Recovery
abroad has increased demand, from which
Czech industry has profi ted, and the import
of production means and semi-fi nished products
has logically risen as well.
� CZECH INDUSTRY RECOVERING
SINCE MAY 2009
What preceded this development? Czech industry
peaked at the beginning of 2008. By
the middle of the year industrial production
dropped slightly, during the summer its decline
deepened, and from the autumn, and
particularly at the time of the greatest shock to
the global fi nancial system, it tumbled in a free
fall. The downturn stopped at the beginning
of 2009, when industry entered the phase of
stagnation and stabilisation. In monthly data,
the deepest bottom of industrial performance
is May 2009. Since then, Czech industry has
experienced a gradual recovery, and the fi rst
data show that it is entering the beginning of
2010 with rising dynamics.
Interpreting the year 2009 is problematic
– in year-on-year comparison it recorded
a big fall, but this may be oversimplifi ed. On
month-by-month examination of the data,
industry headed steeply to the bottom
roughly at the turn of 2008-2009 and stayed
there throughout the fi rst half of 2009, but
did not fall substantially deeper. From the
peak at the beginning of 2008, Czech industry
fell to the bottom of the beginning
of 2009 by approximately 20%. The average
fall in the EU 27 during the same period was
about 15%, and in the euro zone about 16%.
This means that Czech industry was aff ected
above average. This was important in terms
of the economy as a whole. Czech industry
creates about 30% of GDP, while the EU average
is approximately 20%.
� STRUCTURE OF INDUSTRY
Let us have a closer look at the structure.
About 90% of Czech industry is manufacturing,
in the more detailed classifi cation the
largest share of industry is accounted for by
the manufacture of motor vehicles (approximately
20%). It is followed by the manufacture
of food and metal products, electrical
equipment, and electric power industry.
The classifi cation is somewhat misleading
as the interrelation of the sectors is high. In
terms of dynamics, the record holder of the
de cade is the manufacture of computers,
which has achieved almost a magic 1 000%
since the beginning of the millennium. The
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