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Czech Republic: Economy Cools Off After Hot Start

Prague, 18 September 1996 (RFE/RL) -- The growth of the Czech economy slowed somewhat after a quick start in 1996, but the economy still expanded at a respectable four percent rate in the second quarter.

The Czech Statistical Office today released growth figures for the Czech economy, which show overall production in the country grew by 4.6 percent in the first quarter of the year and an even 4 percent in the second quarter. The growth is based on fixed prices and does not take inflation into account.

In current prices -- when inflation is taken into account -- the Czech economy produced goods worth $25 billion in the first half of the year.

The trade deficit in the country continues to grow. While exports grew by 4.7 percent, to $12.8 billion in the first half, the value of imports increased by 11 percent, $14.6 billion. Based on fixed prices, the total trade deficit for the first half is nearly $2 billion.

The economic statistics, however, are being overshadowed by a growing banking scandal in the country. The fifth-largest bank in the Czech Republic, Agrobanka, was forced into receivership yesterday because of a cash-flow problem. Czech National Bank Governor, Josef Tosovsky, assured depositors all of Agrobanka's obligations will be guaranteed by the state, however.

But the news comes on the heels of the collapse of Kreditni Banka in the country. Six people have been indicted so far for embezzlement and abuse of trust relating to that collapse.