Sophia's Blog

Sophia's Blog

Czech Republic richer than Italy, happier than UK

Analysis of a 2020 report from the International Monetary Fund shows that the Czech Republic is richer than Italy and Spain, in terms of GDP per capita by purchasing power standards, for the first time since the country was established in 1993.

Previous findings from the 2021 World Happiness Report, meanwhile, showed that happiness levels in the Czech Republic were higher than in the UK or France in 2020. Additional data showed that the Czech standard of living was higher than euro adopters Slovakia and Slovenia.

The varied reports and associated analysis were shared by Lukáš Kovanda of the Czech government’s National Economic Council (NERV) and Chief Economist at Trinity Bank to foreign exchange trading server FXstreet.cz yesterday.

Shortly after, they were tweeted by Czech Prime Minister Andrej Babiš.

“Congratulations and many thanks to all our citizens,” Babiš writes.

According to the International Monetary Fund, real GDP growth in the Czech Republic fell to the tune of -5.6% last year due to economic effects from the coronavirus pandemic.

However, the IMF expects real GDP growth in the Czech Republic to rebound by 4.3% in 2021, which would represent greater growth than in 2018 or 2019.

The Czech inflation rate, based on prices of consumer goods, rose 3.2% in 2020 (an eight-year high) but is forecast to rise by a more modest 2.3% in 2021.

While the International Monetary Fund forecasts Italy and Spain to see similar economic rebounds as the Czech Republic, both of their economies were hit much harder by the crisis. Italy saw a 8% drop in real GDP growth in 2020, and Spain 11%.

In terms of the terms of the World Happiness Rankings, meanwhile, the Czech Republic has surged over the past decade and reached new highs in 2021. In 2021 rankings, which combine scores from 2018-2020, the Czech Republic even topped the United States. Read more about this year’s Happiness Rankings here.

Kovanda puts some perspective on the Czech Republic’s growth over the past three decades.

“If anyone said in November 1989 that within thirty years the Czechs would be a happier nation overall than the French — not only economically but also in society as a whole — it would probably be considered science fiction,” he writes on FXstreet.cz.

“Although we have not caught up with the Germans in wages, we overtook the French in general satisfaction. We can celebrate. But reasonably.”

The economist credits a specific figure in Czech politics with the successes achieved over the past decade.

“Happy anniversary to the key architect of this success!” Kovanda writes on Twitter. Former Czech President Václav Klaus turned 80 years old yesterday.

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