Prague has a well diversified economy with an emphasis on the industrial sector.
The city was negatively influenced by the recession in Russia (1999), although since the Czech’s entry into the European Union (2004) it has helped the economy regain its strength. EU entry has increased exports primarily to its neighbour Germany, and foreign investments have nearly doubled.
The Czech Republic is expected to adopt the Euro around the year 2012, and therefore the currency still in place is the Czech Korouna (CZK).
Costs are relatively lower here compared to other EU cities and this has encouraged many international companies to base their European headquarters in Prague. Additionally, international film production companies have also been attracted to the city not just for the lower costs but also for the fascinating architecture.
Approximately one-fifth of all investment in the Czech Republic takes place in Prague.
A significant proportion of research and development is based in Prague, especially in the search to find alternatives for natural resources. The city is still highly dependent on Russia for the supply of oil and gas and therefore officials are looking to develop solar power and nuclear plants, as well as other fossil fuel solutions.
Prague’s GDP per capita is more than double that of the Czech Republic and the city is responsible for generating over 21% of the national gross domestic product. This ranks Prague amongst the 12 richest EU regions in terms of GDP per capita/Purchasing Power Parity.
The city of Prague has an economy based on various industrial sectors. These include aircraft engines, diesel engines, refined oil products, electronics, chemicals, food, printing, automobiles etc.
However in the last decade, Prague’s economy has undergone a major transformation; manufacturing has decreased and there has been rapid growth in the newly privatised service sector.
Business services like finances, information technologies, real estate, consulting and advertising have expanded. Though, the tourism industry plays an exceptional role in the economy, contributing nearly 60% to Prague’s overall income.
Prague has a lower unemployment rate than the rest of the country. Even though jobs have declined in the manufacturing sector, Prague still holds the largest industrial centre in the Czech Republic.