Trade of vehicles and pharmaceuticals between CEE and the US

On the radar

• Inflation rate in Serbia increased to 4.6% y/y in January.

• Current account deficit reached EUR -1254 million in Slovakia in December and EUR -933.2 million in Serbia.

• Today at 10 AM CET Poland will release January’s industrial output growth, producer prices, employment and wage growth.

• At 11 AM CET, Croatia will publish January’s unemployment rate and December’s wage growth.

Economic developments

On Tuesday, the U.S. President, Donald Trump, said he intends to impose auto tariffs close to 25% and similar duties on semiconductors and pharmaceutical imports. Therefore, we will examine the trade of vehicles and pharmaceutical products between CEE and the US. Firstly, Slovakia, Hungary, and Slovenia are the most exposed CEE countries concerning trade with the US, with at least 5% of GDP exposure (navy dot on the graph). In terms of structure, almost 80% of total US imports from Slovakia comes in the form of vehicles (green bar). In Hungary, vehicles also play a more important role with a roughly 20% share. Slovenia shows little diversification, as more than 70% of total US imports from Slovenia are pharmaceutical products (pink bar). This sector has the highest share of total US imports from Croatia and Hungary as well. In other CEE countries, exposure in both sectors is rather limited.

Market developments

The CEE currencies have changed trend and weakened against the euro since the beginning of the week. EURCZK moved to 25.12, EURHUF is at 402, and EURPLN moved down to 4.17. This development in the FX market is likely driven by global factors such as tariff announcements, Fed minutes suggesting stability of rates, or Trump's words and assessment of Ukraine and Zelensky. President Trump has also been exerting pressure on Romania to allow the far-right candidate to run for office. In the Czech Republic, the central bank governor recommended cautiousness when investing in cryptocurrencies. The Czech central bank is preparing a study on Bitcoin before making any investment decisions.

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