Czechia is the 'sick man of Europe' says analysis in Germany's Die Welt

The German publication warns of a growth trap, adding that Czechia is the only EU country not to have recovered from the pandemic slump. Staff

Written by Staff Published on 13.11.2023 11:00:00 (updated on 13.11.2023) Reading time: 2 minutes

The Czech Republic is the only EU country that has not yet recovered from the pandemic slump. The country's economic model has become outdated, and economists even warn of a growth trap, German newspaper Die Welt wrote on Saturday.

The Czech Republic has become the "sick man of Europe" according to an analysis in Die Welt, which finds the country languishing in a "middle-income trap" with weak growth on the horizon. Experts warn that without adopting new high-tech industries, Czech competitiveness will continue to lag as neighboring Poland closes the prosperity gap.

Underlying factors in the last decade

The paper notes that while the Czech economy was the only EU nation not to rebound from the pandemic recession, underlying factors like energy inefficiency and an outdated growth model have slowed progress for over a decade.

The story cites research from the Prague-based Institute of International Relations that finds the Czech Republic "exhausted all previous factors of growth, lost its competitive advantages, and fell into the so-called middle-income trap." Economy analysts foresee stagnant living standards and falling further behind the EU average if current trends of lagging investment in innovation continue.

A spokesperson for the Czech Chamber of Commerce tells Die Welt that a "well-trained workforce and low costs can only sustain growth so long" and that the country has exhausted engines of the past without developing high-value industries. Unless action is taken, some economists warn Poland may surpass Czech GDP per capita in the coming years.

The economy is too expensive to compete with cheaper, low-wage countries, but not yet technologically advanced enough to keep up with technologically advanced countries like neighboring Germany.

Kryštof Kruliš, a researcher at the Association for International Affairs Research Center in Prague

A pessimistic outlook for the 2024

The situation is unlikely to change for the better in the near future, as experts predict weak growth for next year as well. Tomáš Dvořák, chief economist of the analytical company Oxford Economics, said the Czech economy was "facing a significant phase of weakness."

In closing, the article recaps how Germany outperformed from 2009 onward while the Czech prosperity lag widened, quoting the Chamber that declining competitiveness could see Warsaw ultimately eclipse Prague in a serious reversal from a decade ago. Czechia is "at the biggest turning point in its modern history," the Chamber concluded.

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