Domestic factors will weigh on Central Europe’s autos

Subject

Central Europe’s car industry.

Significance

The uncertainty surrounding US foreign trade policy has created headwinds to growth for Central Europe (CE) and its automotive sector, even though CE auto exports are highly concentrated on the EU, and CE has only limited trade exposure to the United States. Business and consumer confidence is patchy among some of the fastest-growing economies in the region, such as Poland.

Impacts

• CE auto production will be an important driver of economic growth in 2018-19; Slovakia has the highest per capita auto production globally.
• Robust GDP growth should help partly offset declines in business or investor confidence in the short term.
• However, the worsening price competitiveness of the car industry will be a concern.