Czech Republic, Hungary most exposed to slowdown
Companies tap overseas markets, new industries
Most aim to keep turnover stable, some see job cuts
Global conflicts, Red Sea crisis complicate efforts

BUDAPESTPRAGUE, Jan 30 Reuters The sickly state of the German economy is the next big challenge for the exportreliant countries of central Europe, which are still recovering from some of the world39;s worst inflation spikes in the wake of the COVID19 pandemic.

Close trade ties with Germany and its oncemighty auto sector were for years a boon for the region since the collapse of communism. But now those ties risk becoming a drag on the economies of Hungary, Czech Republic and Slovakia.

Already, some local companies reliant on ties with Germany are trying to tap deeper into other overseas markets and branch into industries like defence to mitigate the weakness of their large western neighbour, where another year of nearrecession looms.

However such efforts come at a time of major geopolitical uncertainties, with the Ukraine war, Middle East conflict and rising protectionism. Despite the push into the defence sector, all of these factors could hamper the efforts of the region39;s companies.

Economic disruption in the region39;s most important trade partner, and persistent weakness in the auto sector, pose additional risks of economic setback to the CEE region, said Dawn Holland, Director, Economic Research at Moody39;s Analytics.

Central Europe39;s inflation surge,…