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February 11, 2019

How Has the Eurozone Debt Crisis Affected the Czech Republic?

The Eurozone debt crisis is still the elephant in the room and still affecting a majority of European countries – even those that don’t outwardly show signs of distress.

However, even countries outside of the euro have seen undue distress due to the crisis. The Czech Republic was all set to adopt the EUR – and, economically, the country would be fine to do so. However, there is much opposition from within the Czech Republic to adopting the euro based on the ongoing Eurozone debt crisis. Indeed, a poll found a shockingly low amount of Czech citizens wanted to join the euro – no doubt as a direct response to the ongoing debt crisis. So, just how has the Eurozone debt crisis affected the Czech Republic?

The Czech Republic Reticent to Join Euro

The Czech Republic are reticent to join the currency because they don’t want to be bound by the rules that they are responsible for the bailout of Greece. The nation feels that as the decisions were out of the hands of the Czech people and happened before they adopted the currency, they shouldn’t be responsible for the consequences. Indeed, the Eurozone debt crisis timeline doesn’t look too positive, with events in 2018 such as Italy’s budget being rejected by the EU resulting in a decline to the EUR/USD price. The EUR/USD is a strong indicator of how the Eurozone is faring, as the trading pair reflects the two largest currency economies in the world. Predictions based on the forecast and what has previously been can help indicate what may happen with a particular economy, which could explain why the Czech Republic remains reluctant to join the currency.

Czech Economy Buoyant and Strong

The Czech economy is buoyant, and the GDP continues to grow by several percentage points per year. So it’s understandable that citizens don’t want to be tied to an institution they consider to be marred with trouble. Yet, some dissenters in the Czech Republic claim that they are still feeling austerity despite the strong economic figures. However, there’s no guarantee that strength in the Czech economy can’t be sustained with the Eurozone. The Eurozone may be in crisis, but the future is still bright. Indeed, the unemployment figures for the Eurozone fell to 7.9% (with 3.9% unemployment considered full employment due to sickness, overlapping jobs, early retirement, etc.) 7.5% is the average in the Eurozone for unemployment before the 2008 financial crash, which indicates that things are growing economically more positive.

The problems in the Eurozone are ironing themselves out, or at least not being felt as strongly as before. In fact, they seem particularly rosy compared to the financial trauma that the US is facing over the US-China trade war and that Britain is facing due to the uncertainty over leaving the European Union. Indeed, while the Czech Republic may want to keep their koruna now, there is no ruling out adoption of the euro as the currency reclaims its position relative to the other currencies on the global market.

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