Final Word from Thursday, January 19, 2012



Everyone from the president, PM and CNB governor on downtalks about how the CR is a small, open economy heavily dependenton exports. When we heard VP Radek Špicar of theConfederation of Industry say on Rádio Česko that exportsaccount for 80% of GDP, we decided to look into it. Accordingto Eurostat's estimates of exports and GDP in Europe, Czechexports of €113bn did indeed account for 74% of the €153bn inGDP last year. For the EU as a whole, exports were 44% of GDPin 2011, and for the EU's largest exporter, Germany, the figurewas 50%. The CR is tremendously dependent on exports for itsGDP, yet when exports fell in the crisis year 2009 by 15%, GDPslipped by only 8.3%. The difference was made up by more governmentborrowing. And herein lies the rub. The CR is drasticallyincreasing its government debt on the back of strong exports,and it has to borrow even more money whenever exportsdon't keep pace. This is why the CR - which will soon probablyface another export crisis - deserves a credit downgrade.

Glossary of difficult words

everyone on down - everyone from someone in a high position to those in lower positions;

rub - a difficulty, esp. one of central importance in a situation;

on the back of - taking advantage of something successful to achieve something else;

to keep pace with - to move, develop or progress at the same speed as.

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