Slowdown in Global Car Sales Weighs on EU’s Eastern Economies
Slowdown in Global Car Sales Weighs on EU’s Eastern Economies
(Bloomberg) --
A slowdown in global car sales and the threat of U.S. tariffs are curbing economic expansion in eastern Europe, a critical manufacturer for Europe’s auto industry.
That’s according to the European Bank for Reconstruction and Development, which trimmed its growth forecast for the region by 0.1 percentage point this year and next. Slovakia, the world’s largest car producer relative to population, saw the largest downgrade based on its exposure to Germany’s auto giants.
“Given its deep integration in ‘factory Europe’ and the importance of the automotive industry for the regions’ economies, emerging Europe is highly vulnerable to weakness in the automotive sector and a further slowdown in Germany,” the London-based development bank said Wednesday in its bi-annual report.
The region’s economic growth will probably slow to 3.7% in 2019 and 3.2% next year because of weakness in western Europe and beyond, though tight labor markets will push wages and consumption higher, driving consumption, and financing conditions are loose.
Slovakia, Hungary, Slovenia and Romania, where about 3%-5% of workers are directly employed in auto production, are particularly exposed to the worldwide shifts in demand for cars and potential U.S. tariffs on that industry in Europe.
To contact the reporter on this story: Aaron Eglitis in Riga at aeglitis@bloomberg.net
To contact the editors responsible for this story: Andrea Dudik at adudik@bloomberg.net, Andrew Langley, Michael Winfrey
©2019 Bloomberg L.P.