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CZECH REPUBLIC
Year of EU entry 2004
Political system Republic
Capital city Prague
Total area 79,000 km2
Population 10.2 million
Currency Czech koruna |
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Overview
The Czech Republic became an independent state in January 1993 after Czechoslovakia split into its two constituent parts. Before the Second World War, Czechoslovakia was one of the 10 most industrialised states in the world, and the only central European country to remain a democracy until 1938.
The Czech capital, Prague, is more than 1,000 years old and has a wealth of historic architecture of different styles. Because of this, the city has become a favoured location for many international filmmakers.
Manufacturing is still a major economic activity, especially the production of automobiles, machine tools, and engineering products. Iron and steel industries are important in Moravia. The chief crops are maize, sugar beet, potatoes, wheat, barley, and rye.
Hills and mountains cover about 95% of the country - ideal for skiing, mountain biking and hill walking. Wild boar and fox are found in the abundant woodlands.
The Czech Republic produces world-famous beer as well as mineral water from more than 900 natural springs (a world record). Wine is produced in the southern regions of Moravia and in part of Bohemia. Traditional dishes often include 'knedlíky', which is a type of dumpling made from potatoes or bread.
Among the famous Czech people are the Art Nouveau artist Alfons Mucha, composers Antonin Dvorák and Bedrich Smetana, as well as the writer Milan Kundera.
Economy
The Czech Republic is one of the most stable and prosperous of the post-Communist states of Central and Eastern Europe. Growth in 2000-05 was supported by exports to the EU, primarily to Germany, and a strong recovery of foreign and domestic investment. Domestic demand is playing an ever-more important role in underpinning growth as interest rates drop and the availability of credit cards and mortgages increases. Current account deficits of around 5% of GDP are beginning to decline as demand for Czech products in the European Union increases. Inflation is under control. Recent accession to the EU gives further impetus and direction to structural reform. In early 2004, the government passed increases in the Value Added Tax (VAT) and tightened eligibility for social benefits with the intention to bring the public finance gap down to 4% of GDP by 2006, but more difficult pension and healthcare reforms will have to wait until after the next elections. Privatisation of the state-owned telecommunications firm Cesky Telecom took place in 2005. Intensified restructuring among large enterprises, improvements in the financial sector, and effective use of available EU funds should strengthen output growth.
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