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Czech-republic Economy—overview: Political and financial crises in 1997 shattered the Czech Republic's image as one of the most stable and prosperous of post-Communist states. Delays in enterprise restructuring and failure to develop a well-functioning capital market played major roles in Czech economic troubles which culminated in a currency crisis in May. The currency was forced out of its fluctuation band as investors worried that the current account deficit which reached about 8% of GDP in 1996 would become unsustainable. After expending $3 billion in vain to support the currency the central bank let it float. The growing current account imbalance reflected a surge in domestic demand and poor export performance as wage increases outpaced productivity. The government was forced to introduce two austerity packages later in the spring which cut government spending by 2.5% of GDP. A tough 1998 budget continues the painful medicine. These problems were compounded in the summer of 1997 by unprecedented flooding which inundated much of the eastern part of the country. Czech difficulties in 1997 contrast with earlier achievements of strong GDP growth a balanced budget and inflation and unemployment that were among the lowest in the region. The Czech economy's transition problems continue to be too much direct and indirect government influence on the privatized economy the sometimes ineffective management of privatized firms and a shortage of experienced financial analysts for the banking system. Prague forecasts a balanced budget 2.2% GDP growth 5.2% unemployment and 10% inflation for 1998. GDP: purchasing power parity—$111.9 billion (1997 est.) GDP—real growth rate: 0.7% (1997 est.) GDP—per capita: purchasing power parity—$10 800 (1997 est.) GDP—composition by sector: agriculture: 5% industry: 40.6% services: 54.4% (1996) Inflation rate—consumer price index: 10% (1997) Labor force: total: 5.124 million (1997) by occupation: industry 33.1% agriculture 6.9% construction 9.1% transport and communications 7.2% services 43.7% (1994) Unemployment rate: 5% (1997 est.) Budget: revenues: $14.2 billion expenditures: $14.6 billion including capital expenditures of $NA (1997) Industries: fuels ferrous metallurgy machinery and equipment coal motor vehicles glass armaments Industrial production growth rate: 6.9% (1996) Electricity—capacity: 13.85 million kW (1994) Electricity—production: 53.285 billion kWh (1995) Electricity—consumption per capita: 5 069 kWh (1995) Agriculture—products: grains potatoes sugar beets hops fruit; pigs cattle poultry; forest products Exports: total value: $21.7 billion (f.o.b. 1996) commodities: machinery and equipment 32.7% manufactured goods 28.8% raw materials and fuel 9.2% food 4.1% (1996) partners: EU 60.9% CEFTA 21.4% Slovakia 13.9% EFTA 1.7% (1996) Imports: total value: $27.7 billion (f.o.b. 1996) commodities: machinery and equipment 38.2% manufactured goods 19.3% raw materials and fuels 12.4% and food 5.6% (1996) partners: EU 61.1% CEFTA 16.3% Slovakia 11.8% EFTA 2.2% (1996) Debt—external: $20.7 billion (1996) Economic aid: $NA Currency: 1 koruna (Kc) = 100 haleru Exchange rates: koruny (Kcs) per US$1—25.775 (September 2004) 35.357 (January 1998) 31.698 (1997) 27.145 (1996) 26.541 (1995) 28.785 (1994) 29.153 (1993) note: values before 1993 reflect Czechoslovak exchange rates Fiscal year: calendar year
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