Last year we were successful thanks to investments in health, safety and savings growth, on the other hand, we have reserves in the availability of housing and low added value of companies
Last year, according to the Prosperity and Financial Health Index, the Czech Republic fell from 15th to 16th place among European Union countries. The main reason was poor housing availability. On the other hand, we are doing particularly well in the field of health care and managed cybersecurity.
The issue that currently embodies our Achilles' heel continues to be the availability of housing. It covers everything from the high prices of many new buildings, through lengthy construction procedures, to the costs of maintaining a household. As experts point out, it mainly affects young people who often have to rely on parents' help.
"The problem with housing availability is the lengthy approval of buildings, and that's precisely where the state should exert all its efforts. If we were to build more and faster, housing availability would significantly improve,"
The CEO of Trigema developer company Marcel Soural stated for LP Life and added:
"Given the persistent significant excess of demand, I also expect prices of new properties to increase by 5 to 10 per cent this year, which will then indirectly affect rental prices.“
His words are also confirmed by the chairman of the board of Skanska Residential Petr Michálek, who described the situation in Prague.
"Even though more new flats enter the market each quarter than in previous years, especially due to strong demand that motivates developers to bring as many projects to the market and a stock of pre-prepared projects from the periods of deferred demand in 2022 and 2023, it is still not enough to satisfy the enormous interest and fulfill the long-term needs of the capital's development."
Low work efficiency and internet problems
Another major shortcoming is our low added value, which is mainly generated in the area of research and development of products and services, as well as marketing and sales. According to representatives of the independent initiative of entrepreneurs, the Second Economic Transformation, the Czech Republic is unfortunately still a country that relies on a subcontracting economy based primarily on production.
"We need to undergo a transformation to our own products and services. The path is not easy, but it's the only possible one and we are trying to define and support this path,"
Explains in the Press Release Wikov Industry owner Martin Wichterle.
In addition to this, the Czech Republic, in comparison with a number of other European countries, suffers from a lack of start-ups and underdeveloped digital infrastructure. The main problem is the small coverage of high-speed internet. It is only available in 54 percent of the country, which places us just ahead of Greece in second to last place within the entire European Union. According to some, domestic legislation is to blame.
"Our priority in covering the internet is primarily the construction of an optical network, which is key to the development and digitization of the Czech Republic. However, we often encounter complicated legislative processes or obstacles from municipalities, which significantly prolongs the construction,"
wrote LP-Life, the director of external relations and sustainability at T-Mobile, Martin Orgoník.
Health, safety, and savings are improving
On the contrary, we have noticed the biggest progress in the financial health of the inhabitants. While in 2022 we were still in 13th place in this respect, this year it is already the ninth place. The biggest difference occurred in savings.
"The rate of household savings increased against the long-term average already during the pandemic, especially in households with higher incomes. Its maintenance in the following years can be somewhat explained by higher interest rates, which remained above the EU average in the Czech Republic,"
quoted Tereza Hrtúsová from Česká spořitelna Czech Press Agency.
In health and safety, we then took first place immediately. The success is primarily due to well-managed protection against cybercrime, very low infant mortality and relatively available medical care.
Czech Republic = economic tiger
We are also becoming Central European "tigers" in foreign investments, pointed out the initiative Second Economic Transformation. Czech investors have bought and now hold stakes in foreign companies worth $70 billion, which is about 1.5 trillion crowns. For comparison: this is similar to what, for example, the Portuguese have invested abroad. At the same time, this amount is approaching the volume of investments that investors from Israel, for example, hold abroad. We have thus outrun other Central European countries. Poland, which is almost 4 times larger in terms of population, does not have capital in direct investments abroad even at half the height. This means, among other things, that we are becoming a region from a country from which dividends are flowing out, where in turn revenues from foreign investments will start to flow in. And they will start improving the performance of our economy in the future.
The Prosperity and Financial Health Index indicates in which areas we are comparable with other European countries and where we are lagging behind. Despite many political proclamations, we have not yet been able to improve our weaknesses too much. That's why this index is so interesting. It shows that mere words are usually not enough for improvement.
Sources: own queries, Second economic transformation, Prosperity and Financial Health Index, CTK,
