A policy-driven spike in inflation in the first half of 2008 is going to temporarily dent otherwise healthy economic conditions, and real GDP growth will dip below potential as the increases in indirect taxation and administered prices squeeze consumption. Underlying inflation is low, but is creeping up and further tightening of monetary conditions is expected.

During a speech to the OECD Council in Paris in July, Czech president Vaclav Klaus took stock of his country’s economic record since 1995 when his country joined the OECD. The visiting president also looked to the future and the prospects of European integration.