The volume of the Czech Republic´s GDP has grown by over 500 percent in nominal terms since November 1989 and while in 1992 it was worth Kc672bn, now it is over Kc4,000bn,according to current data from the Czech Statistical Office (CSU) and analysts´ calculations.
In real terms, that is when taking into account price development and other indicators, Czech GDP has increased by over a half since 1989. "The quarter of a century of market economy has brought a significant increase in economic performance and standard of living to the Czech Republic," said Deloitte chief economist David Marek.
Apart from the over 50 percent real GDP growth, average wage after indexation increased by 52 percent, from Kc3,170 in 1990 to Kc25,800 this year. Without inflation, average wage rose over eight times. "It can be said without exaggeration that the past 25 years represent for the Czech lands the most successful quarter of a year in history from the economic point of view," said Lukas Kovanda, chief economist of financial group Roklen.
While in 1995 one hour worked represented created nominal value of Kc161, in 2013 it was Kc428. This is over a 150 percent growth, and nearly a 60 percent growth after adjustment for inflation, he remarked. "In one hour worked, we are creating nearly two thirds higher value in real terms than in 1995," Kovanda added.
The standard of living increased significantly as well. Per capita GDP was below Kc100,000 in 1990, while last year it was almost Kc 389,000. The standard of living in per capita GDP in the purchasing power parity rose from some 60 percent of the EU average in 1993 to 80 percent last year. The purchasing power parity is a ratio among currencies that expresses the ability to buy the same basket of goods or services in different countries.
Slovakia was even more successful in this respect in the past quarter of a century, Kovanda remarked. In 2003 before the EU entry, per capita GDP in the Czech Republic was at 76 percent of the EU countries, and per capita GDP in Slovakia at 57 percent of the EU average.
Slovakia reached 76 percent of the EU average last year, while the Czech Republic improved "only" to 80 percent. "Slovaks have thus lowered their economic distance from the Czech Republic to a difference of just ten years," Kovanda noted.
The structure of the economy also changed in the last 25 years. "Many companies disappeared during the transformation and the share of artificially and ineffectively supported sectors decreased, while the share of sectors for which the Czech economy has more favourable conditions grew," Marek said.
The share of industry in gross value added in the whole economy dropped from 38 percent in 1989 to 33 percent this year. The share of agriculture fell from 8.3 percent to 2.3 percent and the share of construction from 8.5 percent to 5 percent. On the other hand, the share of services increased from 45 to 60 percent.
The change in the economic system also brought growth in the financial sector and use of debt. "The debt of the individual sectors of the Czech economy and its external debt do not exceed reasonable limits and are not a potential source of economic instability," Marek added.
GDP development since 1990:
|Year||GDP in Kc bn (current prices)|
Source:CTK /based on statistics of CSU (0ctober 5, 2014)