the region, and public opinion polls show strong support for reform.
The country emerged from recession in 1994 with 2.6% growth and
reached about 5% growth in both 1995 and 1996 while keeping a balanced
budget and reorienting exports to the EU. Inflation and unemployment
of 8.7% and 3.3% respectively in 1996 are among the lowest in the
region. Prague's mass privatization program, including its innovative
distribution of ownership shares to Czech citizens via "coupon
vouchers," has made the most rapid progress in Eastern Europe. About
80% of the economy is in private hands or is partially privatized. The
Czech Republic appears to be the East European frontrunner in economic
integration with the West; for example, in 1996 it began to strengthen
its bankruptcy law and to improve the transparency of stock market
operations. It was the first post-Communist member of the OECD and is
expected to be in the next group of new EU members. Its solid economic
performance has led Standard and Poor's to upgrade the country's
sovereign credit rating to "A" and has attracted over $6.7 billion in
direct foreign investment to Czech industry between 1990 and September
1996 - one quarter from the US. Prague's biggest macroeconomic
concerns now are mounting trade and current account deficits. In
addition, the Czech economy still faces transition problems. The
government continues to exert too much direct and indirect influence
on the privatized economy, and the management of privatized firms
sometimes is ineffective. Insufficient regulation and lack of public
information in the capital markets and the banking system, combined
with a shortage of experienced financial analysts, limit the ability
to distribute new credit efficiently. The judicial system also has
trouble speedily processing bankruptcy cases. Prague has promised to
overhaul its bankruptcy law and improve stock market and bank
operations, but it will take years to ensure compliance. Prague
forecasts a balanced budget, 4.5% GDP growth, 3.3% unemployment and
7.5% to 8% inflation for 1997.

GDP: purchasing power parity - $114.3 billion (1996 est.)

GDP - real growth rate: 5% (1996 est.)

GDP - per capita: purchasing power parity - $11,100 (1996 est.)

GDP - composition by sector:
agriculture: 4%
industry: 43%
services : 53% (1996 est.)

Inflation rate - consumer price index: 8.7% (1996 est.)

Labor force:
total: 5.107 million (1996)
by occupation: industry 33.1%, agricultu