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Czech Republic: Selected Issues
Author:
International Monetary Fund. European Dept.
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Series:
IMF Staff Country Reports
Volume/Issue:
Volume 2025: Issue 036
Language:
English
Publication Date:
04 Feb 2025
DOI:
https://doi.org/10.5089/9798229000192.002
ISBN:
9798229000192
ISSN:
1934-7685
Pages:
36
Keywords:
macro News; macroeconomics news; ECB monetary policy surprise; EU TFP frontier; inflation expectation; Automobile industry; Total factor productivity; Productivity; Asset prices; Global; Europe; Eastern Europe
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This Selected Issues paper discusses perspectives on the Czech Republic’s structural productivity slowdown. The Czech economy has underperformed European peers in the post-pandemic period and economic convergence has come to a halt. This outcome is often attributed to the country’s links to specific slow growing trading partners and to its energy-intensive economic structure. A decline in productivity, along with a slower increase in the labor force has been a crucial factor. The paper focuses specifically on the challenge posed by declining productivity, uncovering multifaceted factors and dynamics at play. Empirical analysis suggests that further R&D investment could reduce gaps with the total factor productivity frontier, sector-specific bottlenecks should be addressed, and productivity-enhancing labor reallocation could be better supported by more targeted policies. Though structural transformation may be inevitable, it does not need to adversely affect productivity as observed in recent years. The Czech Republic may evolve towards a more mature, diversified economy with certain services playing an increasingly significant role.
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Cover IMF Staff Country Reports
IMF Staff Country Reports
ISSN:
1934-7685
Publisher:
International Monetary Fund