Willamette World News

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Czech economy

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The Czech economy has followed the trend of a majority of central and eastern European countries and grown rapidly in the recent years. The Czechs are enjoying standards of living never experienced before.

This seemingly desirable state of our economy is certainly pleasing but it brings many worries to the economists.
As an economics major, I see that the expansion has been driven purely by an increase in consumption and foreign investment, and not by any political reform in our economy.
Infrastructure is being built and rebuilt, foreign investment capital is pouring in, net export is high, wages are rising, unemployment is on a decline and inflation has been kept in check. In some instances, however, this growth seems surprising and unexpected.
The political situation has been somewhat unstable in the Czech Republic, as the right-wing coalition holds a very slim majority in the House. The previous socially democratic government had been more concerned with social security rather than providing incentives to increase production such as low taxation. It moved country away from many capitalistic ideas and the new government must compromise its policies in order to gain the support from the middle-centered parties.
Still, the economy is growing and as of last week, Czech Crown has been the fastest growing currency in the world, setting new records toward both Euro and US dollar. However, just like the US, the Czech Republic is also experiencing a huge public deficit and spending more than one unit of currency per every unit of currency earned. Fears of inflation and sustainability of the growth are reasonable.

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