Monthly Report No. 02/2022

Chart of the Month Omicron wave is sweeping CESEE by Olga Pindyuk Opinion Corner Let’s hope the central bankers are right about inflation by Richard Grieveson Central banks hope that the currently very high inflation will pass without major monetary tightening or balance-sheet reduction. There are plenty of reasons to think that they are right. But if they are wrong, and if much more monetary tightening is required, the impact on the financial sector, the real economy and even the stability of the euro area will be serious. Semiconductor shortage impacting the EU-CEE automotive industry by Doris Hanzl-Weiss and Oliver Reiter The current global semiconductor shortage, which has been triggered by the COVID-19 pandemic, is likely to persist and may well last until 2023, as new production capacities take time to build up. The automotive industry and those EU-CEE economies that specialise heavily in the sector – Slovakia, Czechia, Hungary and Romania – have been particularly badly affected, with resulting economic losses of up to 1% of GDP last year. The business services sector in Central and Eastern Europe by Tomasz Geodecki Following the EU’s eastern enlargement, global players in the business services sector started to invest actively in the low-cost EU-CEE economies. Thanks to continued strong productivity growth, the cost competitiveness of these locations was generally maintained between 2004 and 2014. Moreover, despite the growing internationalisation of the sector, its cooperation with local businesses increased. The rapidly improving skills – as well as the growing importance of knowledge-intensive services – contributed further to the region’s importance as a location for business services in Europe. Monthly and quarterly statistics for Central, East and Southeast Europe