The Fall of Communism at the end of the 1980s brought numerous changes to Europe's political and economic situation. Czechia faced many challenges in the following decade. The peaceful dissolution of Czechoslovakia, the transition to democracy and market economy, and its reorientation toward the West. Despite these difficult circumstances, Czechia became a prospering economy within the European single market and a member of the OECD (Organization for Economic Co-operation and Development).
Economic development
Since establishing an independent Czechia in 1993, the
gross domestic product (GDP) has more than quintupled. It amounted to over six trillion Czech koruna (CZK) in 2021. The only GDP drops were recorded during the financial crisis in 2009 and the coronavirus (COVID-19) pandemic in 2020. When considering
GDP per capita in power purchasing standard (PPS), Czechia has emerged as one of the economic leaders among the former Eastern bloc countries. Most of the country’s
GDP comes from the service sector, a sign of a developed economy in the modern world.
Employment and wages
Czechia remains a country with a low
unemployment rate, which fluctuated between two to three percent in recent years. Therefore, it is currently the best-performing country within the
European Union (EU) regarding unemployment figures, ranking even better than Germany or the Netherlands. Wages are a highly debated topic in Czechia. A clear contrast can be observed when comparing Czech wages to those in nearby Western European countries like Austria and Germany, which are much higher. However, the conditions improved in the past decade or so. In 2010, circa 60 percent of
employees in Czechia earned a gross monthly wage of up to 24,000 CZK. However, this percentage decreased to 18.5 percent by 2021 as the wages gradually rose. The
minimum hourly wage also increased, having more than doubled over the last decade.
International trade
Since 2005, a year after Czechia joined the EU, the country has consistently registered
trade surpluses, meaning the value of the exported goods exceeded the imported ones. The COVID-19 pandemic did not slow down Czechia’s international trading. Although the trade surplus went down in 2021 due to an increased import,
the value of exported goods reached a record figure of almost five trillion CZK that year. Czechia’s
most important trading partner is Germany. In 2021, it was the destination of nearly 1.6 trillion CZK worth of goods, which made up around a third of Czechia’s total export that year. The
most significant commodity in its international trading was machinery and transport equipment, followed by manufactured goods and articles.
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