SHOCK FOR EXPORTS, CZECH MANUFACTURERS COUNTER WITH INNOVATION AND FLEXIBILITY It is no surprise that the role of industry and exports is of key importance for the Czech economy. This country is a typical example of a small, open economy dependent on the development of the external environment. The degree of openness of the Czech economy is one of the highest within the European Union. Moreover, the country´s foreign trade turnover is growing faster than the economy as a whole on a long-term basis. The only exception was 2009, the year of global economic recession. In that year, Czech exports dropped by nearly 10 % in real terms. The recovery, however, was very quick, with exports returning to their pre-crisis levels after approximately 18 months. Investment, on the other hand, took nearly a whole decade to improve.
FOR FOREIGN TRADE, THE PANDEMIC WAS A SHOCK COMPARABLE WITH 2009
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The year 2019 was already a presage of worse times for exporters. The year 2020 and the economic crisis, as a consequence of the new coronavirus pandemic causing the covid-19 disease, meant one thing: the real volume of Czech exports declined for the first time in 11 years. Already in the last quarter of 2019, Czech exports declined in real terms year on year, specifically by 1.2 %, although the annual balance still showed a 1.2 % growth. Czech exports were hit by the recession in German industry with a relatively long delay. German industry was in decline from mid-2018, not only because of the cyclic factors, but also in connection with structural problems, which affected especial-
ly the automobile and energy industries. An even greater shock came at the end of the first quarter of 2020, and especially in the following quarter. The spreading coronavirus pandemic provoked tough restrictive measures on the part of most governments, which strongly paralysed the production abilities of the economies concerned. Absolutely unprecedented was the closing of the borders within the European Union, whose very existence stands on the free movement of goods, services, and persons. The borders with countries outside the EU were naturally also practically impassable. The global entwinement of production chains thus unveiled the weak link of this production model, with a number of manufacturing plants having to be closed because of a shortage of material inputs. This consequently became a problem
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The Czech Republic – Your Business Partner in the EU
