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International Monetary Fund. European Dept.

The Slovak auto industry is deeply integrated in regional and global value chains. While this has brought tremendous benefits, it has also made the sector susceptible to foreign shocks as exemplified by the disruptions it experienced during the COVID-19 pandemic. Going forward, the industry will need to adapt to mega trends such as potential reconfigurations of supply chains and changes in preferences and technology. This paper uses a general equilibrium global trade model to: (i) quantify the impact of the pandemic-induced labor supply shock on the auto industry in Slovakia; (ii) disentangle the spillovers of the COVID-19 shock to the Slovak auto sector through cross-border and domestic production chains; and (iii) shed light on the Slovak auto sector’s exposure to potential changes in the post-COVID global economy, namely higher trade costs with select partners.

Hang T. Banh, Mr. Philippe Wingender, and Cheikh A. Gueye
The COVID-19 pandemic has led to an unprecedented collapse in global economic activity and trade. The crisis has also highlight