Long-term scarring, auto production, CEE inflation

Recent labour market developments offer early signs that employment protection schemes in place in Central Europe have contained the hit to the labour market. This should allow activity to recover more quickly than in Russia, where government support has been slow and a lot of damage to the labour market has already been done. Meanwhile, the collapse in industrial production as a result of lockdown measures over the past few months has been felt most painfully in those economies more dependent on motor vehicles production, particularly in Central Europe. While auto manufacturers have resumed operations, it will take much longer for consumer demand to recover and production capacity to return to normal.