The Czech Republic’s Economy since the 1990s and Its Development Forecasts: Selected Macroeconomic Indicators
Keywords:Average wage, GDP, inflation rate, unemployment rate, time series, exponential smoothing, development forecast, COVID-19 pandemic
Using a comparative developmental analysis of wage levels and other indicators, the present paper aims to capture the changes in the economy and measurable aspects of living standards in the Czech Republic since the beginning of the then Czechoslovakia’s transformation process launched in the early 1990s. To model the trend, analysis of the relevant time series was performed, exponential smoothing as an adaptive approach to trend modeling being applied. Interpolation and extrapolation criteria were used to verify the suitability of the selected exponential equalization; the Durbin-Watson test, determination index, residual autocorrelation functions, t-tests and Theil inequality coefficient were employed as well. The variables analyzed are the average wage, GDP and the rates of inflation and unemployment, supplemented by the minimum wage and the subsistence minimum. The data used come from the official website of the Czech Statistical Office. They were processed using SPSS and SAS statistical software and a Microsoft Excel spreadsheet. The results show economic downturns and gradual recoveries accompanied by repeated freezing and starting wage growth. High inflation rates in the transition from a centrally planned to a market economy or the GDP decline at the beginning of the financial crisis are evident, the labor market reacting with some delay, as reflected in the rise in the unemployment rate after the currency crisis in the late 1990s, and in average wage trends during the decline of the economic crisis in the early 2010s. The purpose of this research is also to predict further wage level and macroeconomic aggregate developments until 2023. This study aspires to be the starting point for subsequent research, comparing the original forecasts with the reality of further economic development interrupted by the COVID-19 pandemic.