Feb 29, 2024

Czech Republic’s Economy Now Ranked 14th in the EU

The Czech Republic’s economic standing within the European Union (EU) has weakened for the second consecutive year, according to the 2024 Prosperity and Financial Health Index.

Compiled by Česká spořitelna and Europe in Data, the index reveals the Czech Republic now holds the 14th position, down from 12th in 2023 and 9th in 2022.

While the Czech Republic boasts a diverse and complex industrial landscape, its economic performance is hampered by two key factors: low value added and persistently high inflation.

The country recorded the second-highest inflation rate in the EU at 12%, surpassed only by Hungary at 17%.

Food prices have emerged as a particular area of concern. Analyst Tereza Hrtúsová from Česká spořitelna points out that although the Czech Republic remains below the EU average price level for the overall consumer basket, the cost of essential items has risen significantly.

Food prices have practically reached 97% of the EU average, with some items like sugar experiencing a year-on-year increase of nearly 40%.

However, not all food prices have increased. Butter has seen the most significant price drop at 13%, followed by E-type cheese at 6%.

On a more positive note, the Czech Republic regained its second-place position in the index for economic complexity, indicating a diversified and adaptable industrial structure.

This diversification offers some protection against economic shocks compared to economies with a more concentrated industry.

Despite this positive development, low value-added remains a challenge.

As Daniel Rajnoch from InvestBay suggests, strategic investment, support for high-value sectors, fostering innovation, and improving education and workforce skills can pave the way for improvement in this area.

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