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Czech IT Market Slow to Grow--IDC

The Czech Republic has traditionally been a leader in the information technology market among Eastern European countries, but due to a downslide in the Czech economy over the past two years, the International Data Corp. (IDC) predicts slower growth until 2001.

Once the darling of central Europe, the Czech Republic now faces a period of economic stagnation. The impact of political instability on the economy has been disastrous, causing growth in the GDP to slow to 1 per cent in 1997. Meanwhile, the latest estimates for the current year range from zero to negative GDP growth.

The economy has been faced with a number of internal problems, and unemployment has climbed to nearly 7 per cent of the workforce in 1998. On the positive side, inflation remains low at 10 percent and rising exports are reducing the current account deficit.

Due to all these factors, the overall IT market value stagnated between 1996 and 1997, remaining at $1.4 billion. The prediction for 1998 is $1.5 billion.

IDC predicts a growth rate of 7 to 10 percent per year, significantly lower than it used to be in 1989-96, when the Czech IT market began.

However, the growth of the Czech IT market still roughly corresponds with the European average of about 9 per cent. The Czech IT spending/GDP ratio, which is 2.7 per cent, even surpasses the average of Western Europe.

By 2001, IDC expects a growing demand for Internet and intranet solutions, e-commerce applications and client/server ERP solutions. The share of services in total IT expenses is expected to grow as well. Currently it is around 28 per cent, which is typical for emerging markets with underdeveloped hardware infrastructure.