, WEU (associate partner), WFTU, WHO,
WIPO, WMO, WToO, WTrO, ZC

Diplomatic representation in the US:
chief of mission: Ambassador Aleksandr VONDRA
chancery: 3900 Spring of Freedom Street NW, Washington, DC 20008
consulate(s) general: Los Angeles and New York

Diplomatic representation from the US:
chief of mission: Ambassador John SHATTUCK
embassy: Trziste 15, 11801 Prague 1
mailing address: use embassy street address

Flag description: two equal horizontal bands of white (top) and
red with a blue isosceles triangle based on the hoist side (almost
identical to the flag of the former Czechoslovakia)

Economy

Economy--overview: Political and financial crises in 1997
shattered the Czech Republic's image as one of the most stable and
prosperous of post-Communist states. Delays in enterprise
restructuring and failure to develop a well-functioning capital
market played major roles in Czech economic troubles, which
culminated in a currency crisis in May. The currency was forced out
of its fluctuation band as investors worried that the current
account deficit, which reached nearly 8% of GDP in 1996, would
become unsustainable. After expending $3 billion in vain to support
the currency, the central bank let it float. The growing current
account imbalance reflected a surge in domestic demand and poor
export performance, as wage increases outpaced productivity. The
government was forced to introduce two austerity packages later in
the spring which cut government spending by 2.5% of GDP. A tough
1998 budget continued the painful medicine. These problems were
compounded in the summer of 1997 by unprecedented flooding which
inundated much of the eastern part of the country. Czech
difficulties contrast with earlier achievements of strong GDP
growth, a balanced budget, and inflation and unemployment that were
among the lowest in the region. The Czech economy's transition
problems continue to be too much direct and indirect government
influence on the privatized economy, the sometimes ineffective
management of privatized firms, and a shortage of experienced
financial analysts for the banking system. The country slipped into
a mild recession in 1998, but hopes to rebound with 1% growth in
1999.

GDP: purchasing power parity--$116.7 billion (1998 est.)

GDP--real growth rate: -1.5% (1998 est.)

GDP--per capita: purchasing power parity?$11,300 (1998