Russian opposition activist Alexei Navalny arrested on arrival as he returns home
LONG READ: The oligarch problem
COVID-19 and Trump’s indifference helped human rights abusers in 2020
Durov rejects Western funds’ offer to buy 5%-10% of Telegram with $30bn valuation
One of Russia’s biggest wood product companies, Segezha could be Sistema’s next IPO
New Ukrainian VC firm QPDigital aims to invest up to $100 million in digital startups
EBRD investments reach record €11bn in pandemic-struck 2020
OUTLOOK 2021 Lithuania
EBRD says loan to Estonia’s controversial Porto Franco project was never disbursed
Estonian premier quits after Tallinn development scandal
Czech Pirates and Mayors approve final coalition agreement for 2021 elections
OUTLOOK 2021 Czechia
BRICKS & MORTAR: Rosier future beckons for CEE retailers after year of change and disruption
OUTLOOK 2021 Hungary
Hungarian government remains silent after Capitol riots
World Bank expects modest recovery for Europe and Central Asia in 2021
OUTLOOK 2021 Slovakia
FDI inflows to CEE down 58% in 1H20 but rebound expected
Slovakia to invest €1.2bn in digitisation
BALKAN BLOG: The controversial recipe for building up Albania
Heavy flooding causes chaos in parts of Southeast Europe
Vodafone Albania plans €100mn infrastructure investments after AbCom merger
OUTLOOK 2021 Albania
Storming parliaments: New Europe's greatest hits
Kyiv accuses Bosnian President Dodik of lying about icon gifted to Russian foreign minister
Bosnia’s real GDP contracts 6.3% y/y in 3Q20
Sofia-based LAUNCHub Ventures holds first close of new fund on €44mn
ING THINK: Growth in the Balkans: from zero to hero again?
OUTLOOK 2020 Bulgaria
Labour demand down 28% y/y in Croatia in 2020
Zagreb Stock Exchange's Crobex10 index at highest level since March 5
OUTLOOK 2021 Kosovo
Arrera Automobili aims to launch Albania’s first supercar
World Bank revises projection for Moldova’s 2020 GDP decline to 7.2%
Moldova’s PM resigns to prepare the ground for early elections
Socialist lawmakers in Moldova scrap settlement on $1bn bank frauds
75% of Montenegrins want EU membership
Montenegro’s new ruling coalition carves up top state jobs
OUTLOOK 2021 Montenegro
North Macedonia's manufacturing confidence indicator down by 8.5 pp y/y in December
OUTLOOK 2021 North Macedonia
Transparency International warns of high corruption risk in CEE defence sectors
OUTLOOK 2021 Romania
Romania’s central bank cuts monetary policy rate by 25bp to 1.25%
Romanian construction companies' activity slows in November after intense 2020
OUTLOOK 2021 Serbia
Slovenia’s opposition files no-confidence motion against Jansa cabinet
Slovenia’s government to release funds to news agency STA after EU pressure
UK Moneyhub picks Slovenia for post-Brexit European base
Slovenia’s dire COVID-19 situation in 4Q20 caused second economic dip
BEYOND THE BOSPORUS: Let’s tentatively pencil in a date for Turkey’s hot money outflow
OUTLOOK 2021 Armenia
Armenia’s PM cautions conflict with Azerbaijan “still not settled” after trilateral meeting with Putin
COMMENT: Record high debt levels will slow post-coronavirus recovery, threaten some countries' financial stability, says IIF
OUTLOOK 2021 Georgia
Georgia’s political kingpin Bidzina Ivanishvili quits politics
Modern-day “Robin Hood” inspires Georgians drowning in debt
Iran’s navy conducts missile drill while analyst argues Trump even capable of nuclear strike in final days
TEHRAN BLOG: Who’s more credible? Johnson backing Trump’s Nobel chances or Iran applauding arrest warrant for US president?
Central Asia vaccination plans underwhelm, but governments look unruffled
Fears of authoritarianism as Kyrgyz populist wins landslide and backing for ‘Khanstitution’
OUTLOOK 2021 Kyrgyzstan
Mongolia's winter dzud set to be one of most extreme on record says Red Cross
Mongolian coal exports to China paralysed as Beijing demands virus testing of truck drivers
Mongolia fears economic damage as country faces up to its first local transmissions of coronavirus
Mongolia in lockdown after suffering first local coronavirus transmissions
OUTLOOK 2021 Tajikistan
China business briefing: Not happy with Kyrgyzstan
OUTLOOK 2021 Turkmenistan
Turkmenistan: How the Grinch stole New Year
Turkmenistan: The dammed united
COMMENT: Uzbekistan is being transformed, but where are the democratic reforms?
OUTLOOK 2021 Uzbekistan
Download the pdf version
On top of the chaos and slump in demand caused by the coronavirus (COVD-19) pandemic, several Central European countries where the automotive sector accounts for a substantial share of their economies and exports were already threatened by the increasingly antagonistic global trading environment.
Since the start of his presidency, US President Donald Trump picked fights with the EU and particularly China, which he saw as the US’ main international rivals, sparking trade wars that were seen as particularly harmful for the region’s small open economies dependent on a sector with extended intentional supply chains. Czechia, Hungary, Slovakia and Slovenia in particular have large automotive manufacturing and components sectors in relatively small economies.
The presidency is set to be handed over from Trump to president-elect Joe Biden in early 2021, signalling radical policy change in many areas and the revival of the US’ close relationship with Europe.
“We certainly hope that the US will to return to supporting multilateralism and we hope the US will become more supportive of the WTO and rejoin the Paris [climate change] agreement,” said the European Bank for Reconstruction and Development (EBRD) chief economist Beata Javorkik in an interview with bne IntelliNews shortly after the US presidential election.
“The COVID-19 crisis has created enormous uncertainty. Compounding this uncertainty by having trade wars, creating trade policy shocks is the worst one can do during the recovery phase. What we need is stable trading growth that would eliminate uncertainty as much as possible, because we would all need free trade in the recovery phase.”
Meanwhile, analysts are still sifting through Biden’s past statements in an attempt to divine what his policy will be on China.
Noting that US trade policy will be "very important, for lots of reasons, for this region”, Richard Grieveson, deputy director at the Vienna Institute for International Economic Studies (wiiw), told a webinar on November 12: "Trump’s trade policy on China was probably the area where he had the most bipartisan support. I didn’t feel much resistance from the Democrats. I think he’s moved the debate on China and it’s going to be very hard to get back to how it was.”
Speculating on future US policy under Biden, he said: “It’s true that Biden’s language has been quite conciliatory so far towards China, but I’m still very sceptical about how much is really going to change. I think the idea caught hold in the US that China is undercutting the US, stealing ideas from the US. When it comes to the open, globalised world, I don’t think, in economic terms, it’s coming back.”
“Joe Biden’s victory in the US presidential election means that Washington will continue its confrontational policy towards Beijing,” wrote Jakub Jakobowski, project co-ordinator, connectivity in Eurasia at the Warsaw-based Centre for Eastern Studies (OSW), in a comment. However, while policy will broadly remain the same, Jakobowski forecast that Washington will “clearly change its tactics”. In particular, he forecasts that the US’s trade policy towards China will see the biggest policy change as Trump’s customs wars are seen as ineffective.
“It is very probable that Biden will test the effectiveness of a return to the use of multilateral institutions and trade agreements in order to ‘encircle’ China economically and creating separate economic co-operation frameworks for the developed countries, to which China will have no access,” Jakobowski wrote.
“Biden will adopt a less abrasive tone towards Beijing, and will seek China’s co-operation in areas of mutual interest, but the substance of US policy on China will remain tough … It is even possible that the competition between the US and China may intensify,” wrote Ian Bond, director of foreign policy, and research fellow Luigi Scazzieri of the Centre for European Reform think-tank.
A new economic model
When the countries of Central Europe embarked on their transition just over three decades ago, they had certain advantages, not least a strong history in the automotive industry, skilled and relatively cheap workforces and proximity to West European markets, in particular Germany that encouraged specialisation in the auto industry. This saw international automakers as well as component producers set up factories in the region from the early 1990s. However, the resulting vulnerability to external shocks had led economists to warn even before the pandemic of the benefits of evolving to a more balanced model.
This point was made back in mid-2019 by European Central Bank president Mario Draghi, who noted the CEE business model “has become vulnerable to shocks to international trade and financial conditions”.
“The main long-term challenge is moving towards a more balanced growth and financing model, which is more reliant on domestic innovation and on higher investment spending than it has been so far,” Draghi said, as reported by Reuters.
“For Central Europe the growth model was under pressure in a way anyway,” said Grieveson on November 16.
“This trade war was just another thing exposing the extreme export reliance, the extreme openness, especially in three of the smaller Visegrad countries. I think a changing tone in the US is net positive for these smaller economies, but it’s still a pretty challenging situation for them and it will be at least during this forecast period.”
Reflections from our correspondents on the ground in the four Central European countries of Czech Republic, Hungary, Poland and Slovakia.
here to continue reading this article
and 5 more for free or purchase
12 months full website access including
the bne Magazine for just $250/year.
Register to read the bne monthly magazine for
Password could contain only
and have 8-20 symbols length.
Please complete your registration by confirming your
A confirmation email has been sent to the email
address you provided.
can't be empty.
No user with
this email address.
Access recovery request has expired, or you are using
the wrong recovery token. Please, try again.
Access recover request has expired.
Please, try again.
To continue viewing our content you need to complete
the registration process.
Please look for an email that was sent to
with the subject line
"Confirmation bne IntelliNews access". This email will have
instructions on how to complete registration
process. Please check in your "Junk" folder in
case this communication was misdirected in your
If you have any questions please contact us at email@example.com
Sorry, but you have used all your free articles fro
this month for bne IntelliNews. Subscribe
to continue reading for only $119 per year.
Your subscription includes:
For the meantime we are also offering a free
digital weekly newspaper to subscribers to
the online package.
Click here for more subscription options,
including to the print version of our
flagship monthly magazine:
Take a trial to our premium daily news
service aimed at professional investors that
covers the 30 countries of emerging
For any other enquiries about our
products or corporate discounts please
contact us at
If you no longer wish to receive
Magazine annual print
Website & Archive
Combined package: web
access & magazine print
Take a trial to our premium daily news service
aimed at professional investors that
covers the 30 countries of emerging Europe: