The OECD's economic survey of the Czech Republic considers recent economic developments and macroeconomic policy challenges, with a special feature on the fiscal sustainability of health policies. Overall, it finds that the microeconomic reforms and a massive fiscal stimulus have allowed the Czech economy to achieve a recent annual growth rate of about three per cent with price stability and falling unemployment. Privatisation and investment initiatives have made it the leading FDI recipient among European transition economies, leading to rising exchange rate and real wage levels. A rebalancing of the macroeconomic policy mix will depend on fiscal consolidation, a reduction of public deficits and fundamental pension reform. Health policies are fiscally unsustainable in the medium term and reforms will be required, including the emergence of a private health market to absorb current over-capacities.
