The Czech Republic will receive foreign direct investment (FDI) worth $5 billion this year, according to the Economist Intelligence Unit (EIU). FDI is picking up again in 2004 as the EU recovers from stagnant growth. The EIU foresees FDI rising to $6.6 billion next year and peaking at $9.4 billion in 2006. FDI should then drop to $3.8 billion in 2007 and $4.2 billion in 2008.
The country will continue to attract sizeable FDI inflows, although these will gradually decline as the privatisation programme is completed. FDI inflows should help the continued appreciation of the Czech currency, which may curtail exports but will help to contain inflation.
The country is expected to maintain the best overall business environment in the region in 2004-08. Nevertheless, there is some concern that labour is now more expensive in the Czech Republic than in other countries in the region, which may be losing the country potential FDI.
