The Czech Republic’s economic level, which is based on the current purchasing power parity of a country, will rise to 88 percent of the average of 19 euro area countries next year. Czechia is thus getting closer to Italy in this regard and is better off than Poland, Hungary, Slovakia, Portugal, and Spain.
Last year, the Czech gross domestic product (GDP) per capita in relation to the euro area was also at 88 percent, but this year it will probably fall to 87 percent.
The Czech Ministry of Finance pointed out that, according to estimates, GDP per capita in current purchasing power parity decreased last year due to the effects of the pandemic in all monitored countries except Lithuania. The largest decline in GDP was recorded in southern European countries with a greater focus on tourism, especially in Spain, France, Portugal, and Italy.
“Although GDP per capita in terms of current purchasing power parity in the Czech Republic probably fell last year, the relative economic level vis-à-vis the euro area might have risen slightly to 88 percent. It could be around this level in 2021 and 2022 as well,” said the Ministry of Finance.
According to the Ministry’s estimates, the price level in the Czech Republic last year remained at 69 percent of the average of 19 euro area countries.
“In 2021 and 2022, however, the level of the price level of GDP could gradually increase to 71 percent and 72 percent, respectively,” stated the department.
The price level index is the ratio of the exchange rate and the purchasing power parity between currencies.