Czech Republic: Staff Report for the 2010 Article IV Consultation

IMF Staff Country Reports, March 4, 2010

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Large foreign direct investment inflows fostered trade integration, underpinning an export-led expansion.
Higher initial standard of living contained consumption convergence pressures.
An improved fiscal performance contributed to the comfortable external position.
Credible inflation targeting, combined with the external position, resulted in generally low inflation and interest rates.
A liquid and conservative banking sector limited the build-up of balance sheet vulnerabilities.

Export-led expansion driven by large foreign direct investment inflows.
Trade integration supported by inward FDI.
Consumption convergence pressures were contained by a higher initial standard of living.
Inflation: generally low (described as "generally low inflation").
Interest rates: generally low (described as "generally low interest rates").

Fiscal performance: improved fiscal performance contributed to a comfortable external position.
External position: characterized as comfortable, supported by fiscal improvements and FDI-driven exports.

Banking sector: liquid and conservative banking sector limited balance sheet vulnerabilities.
Balance sheet risks: limited build-up due to liquidity and conservative stance of banks.

Subjects: Banking, Expenditure, Fiscal consolidation, Fiscal policy, Fiscal stance, Pension spending, Public debt
Keywords: convergence program, CR, Fiscal consolidation, Fiscal stance, Global, government, headline inflation, ISCR, Pension spending, revenue increase, staff appraisal, staff expectation, Western Europe