In the light of the current economic crisis in the Eurozone, the Czech Republic has postponed its decision on adoption of the euro and is mulling the possibility of setting its sights on markets beyond Europe.
“It is impossible now to set a certain date of our transition to the European currency, as we cannot tell what we would be joining at the moment,” said the prime minister of the Czech Republic, Petr Necas, as cited by the RIA Novosti news agency on Thursday.
The current financial crisis has transformed the economic landscape in the region, presenting a radically different scenario than in 2003, when Prague joined the EU, Petr Necas added.
Necas’s response to the new proposal from Angela Merkel and Nicolas Sarkozy to create an “economic government” in Europe was equally circumspect. The Czech finance minister also believes adopting the euro and joining the EU market may not be fruitful for the small and export-oriented Czech economy.
On Wednesday the country’s Deputy Trade Minister Martin Tlapa said the country’s economy would slow down following a big decline in Germany’s growth to 0,1 per cent in the second quarter of 2011 and 0,2 per cent in the entire Eurozone.
The Czech Republic does not use the common European currency, but EU nations and Germany in particular are major trading partners for the country.
However an investment advisor, Patrick Young, argues that there is currently no risk for the Czech Republic because even if they accept euro now, full integration would take years.
“First of all, to actually join the euro anyway, the Czech Republic would have to join the exchange rate mechanism which means that it is going to be two or three years before they would physically be members of the currency per se. It is not terribly risky for them at the moment.”
Due to the decline in the EU markets, Martin Tlapa said the government is working on a strategy to find new markets for Czech goods in the long-term.
“We’re looking for opportunities in Asia, India, China, Russia, and also Latin America,” Tlapa said