Brno, Czech Republic – A new study has placed the Czech Republic and Poland among the top 5 most stable and robust economies in the EU.
According to the 2018 Allianz Euro Monitor study, published last week, the Czech Republic and Poland respectively rank as the fourth and fifth most stable economies in the European Union, trailing only Germany, in pole position, the Netherlands and Slovenia.
Poland therefore secures the same place as last year, cementing its position as one of the most attractive destinations in Europe. The Czech Republic, ranked n°1 in the 2017 Euro Monitor, loses four spots in the ranking.
Allianz’s report takes a look at four key pillars to determine the health and stability of EU economies: fiscal policy and sustainability, international competitiveness, employment and productivity, as well as private and foreign debt.
The Czech Republic‘s “setback can be traced back to the economy displaying signs of overheating”, according to the report. “The tight labor market contributed to ever higher wage increases, and despite strong productivity gains, this has led to considerable growth in unit labor costs”. With a historically low unemployment rate and record-high number of job vacancies, labor shortages have become one of the Czech economy’s main challenges, pushing wages higher and denting its competitiveness and attractiveness to foreign investors and companies.
The Czech Republic’s diminished price competitiveness strongly contributed to its sliding in this year’s ranking. Moreover, after enjoying a robust and increasing growth rate for several years in a row, the Czech economy started to slow down last year, growing at a yearly rate of 3% (down from 4.5% in 2017), the lowest GDP growth rate among Visegrad economies.
Poland comes right after its Czech neighbor, at the fifth place in the overall ranking, a strong result mainly due to “very high marks for an unemployment rate of below 4%, strong productivity gains and solid employment growth”. Although performing well in terms in fiscal stability and sustainability, Poland’s ratings declined when it came to the economy’s competitiveness, with a similar challenge to its Czech neighbor regarding labor shortages and wage hikes.
The other Central European economies are also gaining ground in this year’s ranking: respectively 15th and 16th last year, Slovakia – which was recently ranked as the fastest-growing developed economy in the world – and Hungary are now tied at the 11th place of the most stable economies in the EU.
The overall assessment of the economic situation of the Eurozone is the best it has ever been since 2001, according to Allianz, although the bloc’s main economies (France, Italy, Spain and Germany) remain a cause for concern, according to the analysts, Germany included, despite taking the pole position in this year’s ranking.
The EU’s heavyweight economies trail at the bottom of the ranking, with France and Italy tied at the last spot, ahead of the U.K. (26th) and Spain (25th).