Industry across Emerging Europe turned a corner in Q4 as auto production rebounded strongly. This comes amid signs that supply shortages are starting to ease; our proprietary shortages dashboard suggests that product shortages may have peaked. We think industry will continue to recover in the coming months as shortages ease gradually. But consumer-facing sectors struggled in Q4 due to rising virus cases, tighter restrictions, greater consumer caution and surging inflation. This is likely to remain the case early this year too, dampening activity in Q1. Many countries have made good progress rolling out third vaccine doses which should lessen the hit from the current Omicron wave and support the economic recovery in general, but the risk is that those countries with much lower vaccine coverage face continued headwinds to growth.
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