Czech economy in 2001: acceleration of growth

Economic growth accelerated in 2001 mostly as a consequence of renewed recovery of domestic demand, gross fixed capital investment being the main pro growth factor. Industry, construction and retail trade showed a solid growth around 5 %. Along with economic growth, external imbalance has begun to threat, again. Both the deficits of trade balance and current account increased considerably as a consequence of the oil price and growing domestic demand. The economy generated trade deficits even in the period of deepest recession. A small open economy is prone to suck in imports whenever economic growth accelerates. A contributing factor is the high import intensity of Czech exports. This type of an economy is, moreover, highly sensitive to changes in the external environment such as in external demand, commodity prices, situation in financial markets, etc., which was confirmed again by strong impacts of the oil price hike.

Keywords: Czech Economy, economic recovery, domestic and foreign demand, trade and current account balance, twin deficit