After a quarter century of effective economic change, the Czech Republic finds itself searching for a new growth model. Relative success, with per capita GDP nearly double compared to 1993 and households having 600% more in the bank than they did two decades, was built by a skilled workforce manufacturing at lower costs than western European competitors. “That model is exhausted,” says David Marek, chief economist with Deloitte in Prague.
The unexpected decision by the Swiss National Bank Thursday to stop defending the longtime benchmark of 1.20 francs to the euro has set off panic across central Europe, with Poland the most exposed of all the region’s countries to the subsequent steep rise of the Swiss currency.
Central Europe in general and Poland in particular have had an astonishing quarter century as their economies have dramatically closed the gap with the wealthier western half of the continent – but the catch-up risks stalling unless a further round of reforms is undertaken, warned the IMF’s deputy head during a Warsaw conference.
Slovak prime minister Robert Fico emerged from last month's presidential elections a bruised and battered political figure – but his loss at the hands of novice politician Andrej Kiska is unlikely to have much of an impact on one of the EU's fastest growing economies.
The results of spring elections seem to be sealed. The Hungarians may be getting ready for the next four years of the rule by Viktor Orbán and his System of National Cooperation. The Prime Minister’s support is growing, owing much to his own political skills, but also to the opposition, which does not pose a serious challenge to the ruling Hungarian Civic Union, Fidesz.
Until recently Poland, the Czech Republic and Slovakia were seen as the countries with the best governing standards, the most solid banking systems, the most open to foreign investors and with generally predictable politics. There used to be a pretty easy split between the good and bad halves of central Europe but today it is becoming increasingly difficult to tell them apart.