Most of Europe saw a downturn in GDP and related figures in 2009, according to Eurostat, the statistical branch of the European Union. The Czech Republic did a bit better than the EU and eurozone averages.
The 2009 GDP in market prices for the Czech Republic was Kč 3.625 trillion, a drop from Kč 3.688 trillion the previous year. Government expenditure was 45.9 percent of GDP, up from 42.9 percent, and government revenue held steady at 40.2 percent of GDP.
“The Czech Republic started creating its debt later in comparison with other countries. There has been a long tradition of balanced private as well as public finances. Moreover, having a faster GDP growth also means having relatively smaller debt to GDP ratio,” said Markéta Šichtařová, director of Next Finance.
Czech government debt rose to Kč 1.280 trillion in 2009, or 35.5 percent of GDP, up from the previous year’s Kč 1.104 trillion, or 30.0 percent of GDP.
The government deficit in 2009 was Kč 210.26 billion, or 5.8 percent of GDP, a rise from Kč 100.3 billion, or 2.7 percent of GDP in 2008.
In the eurozone the government deficit to GDP ratio increased to 6.3 percent in 2009 from 2.0 percent in 2008, and in the EU-27 to 6.8 percent from 2.3 percent.
The government debt to GDP ratio in the eurozone increased to 79.2 percent at the end of 2009 from 69.8 percent at the end of 2008, and in the EU-27 to 74.0 percent from 61.8 percent. For the eurozone, the GDP in market prices in 2009 was €8.9 trillion. ‘The question is is whether the Czech Republic should consider joining the eurozone at all.’
The results for the eurozone should caution the Czech Republic about setting a euro adoption date. “The question is not when the Czech Republic should consider joining the eurozone considering its public finance debt, the question is whether the Czech Republic should consider joining the eurozone at all,” Šichtařová said.
“And I deeply believe we should forget the euro at least for the next 10 years. If the eurozone still exists in 10 years and if it doesn’t struggle for its further existence, then we might start questioning whether to join it. If Greece, Ireland or Spain had not adopted the euro, they would not face the same problems now. I somehow suppose we do not wish to share the same destiny,” she said.
No EU member registered a government surplus in 2009. Twenty-five EU members recorded a worsening in their government deficit relative to GDP in 2009 compared with 2008, while only Estonia and Malta showed an improvement.
Revised figures released by Eurostat in November 2010 show that Greece had the largest government deficit as a percentage of GDP for 2009, some 15.4 percent, while Ireland was at 14.4 percent and the UK at 11.4 percent. Spain also did poorly, at 11.1 percent. Latvia, at 10.2 percent was the only EU country from Central and Eastern Europe to have a deficit over 10 percent.
Growth predicted for 2011
In a separate study, the Organization for Economic Cooperation and Development (OECD) said that GDP in the eurozone would grow 1.7 percent in 2010 and 2011, and 2 percent in 2012. The same study saw Czech GDP at market prices rising 2.4 percent in 2010, 2.8 percent in 2011 and 3.2 percent in 2012.
The Czech Statistical Office has released its preliminary GDP figures for 2010. In the third quarter of 2010, GDP adjusted for price, seasonal and working day effects increased by 3.0 percent, year on year. The Czech Finance Ministry in November estimated that GDP would grow 2.2 percent in the full year 2010 and 2.0 percent in 2011.
The public finance deficit should be 5.3 percent of GDP in 2010 and 4.6 percent in 2011, according to government estimates.