Czech Republic overtakes Spain in key economic indicator

The Czech Republic is catching up with the Western Europe in GDP per capita calculated by purchasing power parity, a key indicator of economic performance. Last year, the country overtook Spain for the first time according to data from the Organization for Economic Cooperation and Development (OECD).

Czech Fund analyst Lukáš Kovanda told news server Aktualne.cz that the Czech Republic has been catching up with economically more advanced European countries. “Countries of the southern wing of the euro area, including Spain, were particularly hard hit by the debt crisis of the first half of the decade. Central and Eastern European countries have not been hit so hard. This allows them now to compare with the southern part of the euro area more quickly than with other parts of the euro area,” he said.

Although GDP per
capita is often used as a broad measure of average living standards,
high levels of GDP per capita do not necessarily mean high levels of
household disposable income, a key measure of average material
well-being of people. Not all income generated by production (GDP)
necessarily remains in the country; some of it may be appropriated by
non-residents such as foreign-owned firms sending profits to their
parent companies. Some parts may be retained by corporations and
government and not accrue to households, the OECD points out

Kovanda said that if factors such as these were taken into account, then the Czech Republic would likely still be behind Spain.

The leader in GDP
per capita by purchasing power parity according to OECD was
Luxembourg at $113,137, followed by Ireland at $83,081 and
Switzerland at $68,079 and Norway at $65,515. The Unites States was
the first country outside of Europe to make the list, at $62,853

For the Czech
Republic to ovetake the EU average and catch up with some of the
leaders, the country would need a long-term concept for economic
development, something it now lacks, according to Kovanda.