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Vizhdan Boranova, Raju Huidrom, Ezgi O. Ozturk, Ara Stepanyan, Petia Topalova, and Shihangyin (Frank) Zhang

I. Introduction The auto sector is macro-critical in a number of European countries . It comprises a large share of manufacturing, employment, and exports. For instance, in Germany—the largest auto producer in Europe—the sector constitutes about 20 percent of manufacturing, 12 percent of employment, and 10 percent of goods exports ( Figure 1 ). In some countries in Central, Eastern, and Southeastern Europe (CESEE), such as the Slovak Republic, it has an even larger footprint. The European auto industry is among the world’s biggest motor vehicle producers

Vizhdan Boranova, Raju Huidrom, Ezgi O. Ozturk, Ara Stepanyan, Petia Topalova, and Shihangyin (Frank) Zhang
The auto sector is macro-critical in many European countries and constitutes one of the main supply chains in the region. Using a multi-sector and multi-country general equilibrium model, this paper presents a quantitative assessment of the impact of global pandemic-induced labor supply shocks—both directly and via supply chains—during the initial phase of the COVID-19 pandemic on the auto sector and aggregate activity in Europe. Our results suggest that these labor supply shocks would have a significant adverse impact on the major auto producers in Europe, with one-third of the decline in the value added of the car sector attributable to spillovers via supply chains within and across borders. Within borders, the pandemic-induced labor supply shocks in the services sector have a bigger adverse impact, reflecting their larger size and associated demand effects. Across borders, spillovers from the pandemic-induced labor supply shocks that originate in other European countries are larger than those that originate outside the region, though the latter are still sizable.
Stephen Ayerst and Neree C.G.M. Noumon

cross-country variations in terms of the sales of suppliers and consumers of intermediate inputs, with some notable large players ( Figure 3 ). Germany stands out as the most important supplier and consumer of Czechia auto sector’s intermediate inputs, reflecting the ownership link between Volkswagen and Skoda Auto. On the intermediate input’s supplier side, Poland, Slovakia, and Italy are the three largest suppliers after Czechia and Germany. On the intermediate input’s consumer side, Russia, France, and Slovakia are the most important individual countries. These