Major trends in industry and external trade in 2016 and reflections on future developments
5. 5. 2017 | Source: Ministry of Industry and Trade of The Czech Republic
Development of the Industrial sector and Development of Foreign Trade in 2016, and expected development in 2017.
The Czech economy is in good shape and everything is pointing to sound growth once again this year. Developments in 2016 were boosted by a favourable economic environment reflecting optimistic mood across the economy. Exports flourished, placing much of domestic output on challenging foreign markets, especially countries in the European Union.
The situation in the EU was complicated by the fact that the Union found itself having to cope with the uncertainties of geopolitical risks and the mounting phenomenon of the “backlash against globalisation”, the protectionist tendencies of which pose a risk to the very essence of this grouping. Externally, the as-yet unknown impact of the British referendum on leaving the EU was hardly reassuring.
Despite these difficult conditions, Czech external trade was successful and, compared to 2015, intensified its positive impact on economic growth. On the domestic front, the role played by manufacturing continued to strengthen as the sector benefited from growing demand combined with lower raw-material and energy costs. Most of the credit for the current progressive results lies with the automotive industry, which is capitalising on the renewed growth on the European automotive market and the rising sales of domestic manufacturers. This situation is also profitable for downstream sectors and branches in manufacturing.
The pro-growth impetus provided by confidence in the future has long been evident in households, which steadily increase their consumption expenditure. On the other hand, economic growth in 2016 was considerably inhibited by weak investment activity as the extraordinary impact of exhausting the last of the EU funds from the previous programming period faded. In 2016, the domestic economy therefore slowed to 2.4%, but even so still surpassed the EU-28 economy, where the growth rate stabilised at 1.9%. Consequently, the Czech Republic drew closer to the average performance of Europe’s advanced economies.