Czech economy reports record growth, three months before elections

09-03-2006

The Czech economy reported record growth last year - new figures released by the Czech Statistics Office show the economy growing by 6 percent, the highest figure in the country's history. It's good news for the government three months before the elections of course, but some analysts say it has less to do with government policy and more to do with the business cycle.

GDP growth, photo: CTKGDP growth, photo: CTK 2005 was a record year for the Czech economy - figures released by the Czech Statistics Office showed GDP growth at 6 percent, the best result in the history of the Czech Republic since it became independent in 1993. Foreign trade is the motor driving the economy - analysts say a substantial improvement in exports accounted for 5.3 percent of the increase.

It's less than three months before the Czech Republic goes to the polls in a keenly anticipated general election, so the figures are good news for the Social Democrat-dominated government. But analysts such as David Marek from Patria Finance say the Czech economy's strong performance is more down to the business cycle than government policy.

"It was a surprise for the market, for the whole Czech economic community. It is definitely a pleasant surprise for the government. I'm slightly worried that it could be misused at the next parliamentary elections because it's more of a kind of upswing in the business cycle, not the result of the economic reforms that we're still waiting for."

But not everyone agrees macroeconomic results will play a significant role in June's elections. Vladimira Dvorakova, lecturer in political science at Prague's Economic High School.

"Well I think they will try to use that, because if you have positive economic results it's something that's very nice for any government that wants to be re-elected. On the other hand I'm not sure how strongly the Czech society is able to take it into consideration. Economic topics, at a macroeconomic level, are still not very strongly appreciated by the Czech public. But in case it's better than if the results had been bad. So it will be used - but the impact on society, I'm not sure."

Vladimir Dvorakova says Czech voters are far more influenced by issues such as unemployment than GDP growth. So while these figures are good news for the government, it's not yet clear how much political capital they'll be able to extract from them at the ballot box.

09-03-2006