Roundtable discussion on Competitiveness and Economic Growth took place in Hrzan Palace

The topic of this roundtable was the current economic development, trends of economic policies for upcoming period and the strategy how to enhance competitiveness of the Czech Republic. Participants included representatives of the ministries, Parliament, economic and social partners, Representation of the European Commission in the Czech Republic, representatives of local authorities, professional public and non-governmental sector. Invitation to participate in this discussion was also accepted by the representatives of the World Economic Forum, an organization annually publishing a number of analytical studies on fundamental contemporary economic issues.

At the beginning the Deputy State Secretary for European Affairs Mr. Martin Tlapa highlighted a long term adverse of the decline of the Czech Republic in terms of the global competitiveness, ranking, this year declining by seven places. Recent developments show increasing differences between those countries, which formerly undertook economic reforms supporting growth, including the flexibility of their labor markets, and those in economic difficulties. Mr Tlapa also introduced an indicative calendar of the upcoming European semester. National Reform Programme for the next year will continue to place emphasis on synergy with the Strategy of International Competitiveness and Cohesion Policy. The Office of the Government will endeavor to find a broad consensus on the reform measures planned for the forthcoming period during upcoming discussions.

Nicholas Davis, Director for Europe at the World Economic Forum, introduced the Global Competitiveness Report 2013-2014 that has been published on 4^th September 2013. The outcomes of this Report state that the ranking of the Czech Republic is mostly negatively affected by inefficient government bureaucracy, low trust in politics and corruption. Infrastructure and innovation are other areas that should still seek improvement.

Jan Michal, Head of the Representation of the European Commission in the Czech Republic, appreciated an inclusive format of participants’ involvement in the process of strategic documents’ preparation. He indicated that the Global Competitiveness Report’s outcomes are largely in line with results of the European Competitiveness Report that has been published on 25^th September 2013 and also the Commission’s evaluation within the European semester that in fact affect the proposals for Country specific recommendations. The absence of the Civil Servant Law, difficulties in implementation of the anticorruption strategy, delays in completion of the backbone infrastructure, frequent tax changes and large number of regulated professions appear to be the most problematic areas. Positive outcomes may be seen in the growth of export in goods with higher added value, increasing number of university graduates and projects supporting venture capital. Structural reforms should build the ground for future achievements of the Czech economy in global comparison.

Outlook of the Czech economy for the next term was introduced by František Cvengroš, Head of the Macroeconomic Prediction Unit at the Ministry of Finance. He reminded of a very limited space for fiscal stimulation caused by the necessity to keep the budget balance under the three percent threshold, continued low confidence in economy and issue of social problems accompanied by high unemployment. On the other hand, we can observe a positive development of inflation and increasing labor market flexibility. Positive news is also growth recovery that is estimated in coming years. The Ministry of Finance is expecting real economic growth of 1, 3% next year followed by 2% growth in the years ahead.

During the following discussion participants mentioned inter alia the need to emphasize more on analyzing difficulties in the process of implementation measures enhancing competitiveness. Representatives of the social and economic partners highlighted the fact that the Czech Republic’s evaluations by different international organizations are more or less alike. It is therefore important not to underestimate these results. All participants appreciated the fact that the discussion within the European semester has started earlier this year.

Next informal discussion will take place on 11^th October 2013 and will concern implementation of Council recommendations and measures in the National Reform Programme 2013. Further discussions are planned for the period from December 2013 till April 2014 in preparations and elaborations for the National Reform Programme 2014.