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CZECHIA: Challenges for Czech economy in 2018

From the economic perspective, the Czech Republic appeared many times among the top performers in the whole EU. Based on statistics, the country has entered the New Year in the best condition. The economy rose by 4.4%, the Czech crown appeared as the second strongest currency in the world,  the level of unemployment dropped to record low 3.5% and the average wage kept rising by 6.8% (up to EUR 1 150). However, despite the ongoing positive trend, the question of unemployment will become a major challenge for the Czech industry. According to the significant discrepancy between the statistics of the Czech Labour Office and Czech Statistical Office, there are around 100 000 people officially registered (i.e. receiving social benefits) at the Labour Office but have an unreported employment at the same time. This phenomenon is also caused by the rising economy that always opens opportunities for shadow economy and unreported jobs. Another reason might be high over-indebtedness of the Czech population when 800 000 are facing execution proceedings forcing many of them to have an unreported employment or leave them fully dependent on state benefits. The record-low unemployment will keep decreasing in 2018 causing fundamental problems for the Czech industry. Based on Hospodarske noviny (business daily) survey, a third of Czech based companies confirm that the lack of employees already had a negative impact on their businesses creating limits for the future growth of the whole Czech economy. Additionally, due to the prevailing uncertainty about the establishment of a stable majority government and referring to the Manifesto of current minority government, no major social or economic reforms cannot be expected in 2018.