ECO ECONOMY-Chip shortage hits Czech and Hungarian industry at start of fourth quarter

PRAGUE, December 7 (Reuters)Auto chip shortages again weighed heavily on Czech and Hungarian industrial production in October, preparing their economies for a weak start to the fourth quarter.

The two countries and Slovakia are all more dependent on the auto sector than neighboring Poland, which posted 7.8% industrial growth in October, according to data from November 22.

Figures on Tuesday showed that production at Czech factories fell 4.9% in October, the biggest drop since June 2020. The drop was smaller than expected but deeper than in September.

Hungary’s industrial production fell 3.4%, also more than expected.

Peter Virovacz, senior economist at ING in Budapest, said there were “still serious supply chain issues” affecting the automotive and electronics industries.

“It seems that the problems affecting the two most important sectors for industry in Hungary will not be resolved quickly, so now the focus is on sectors with less weight, on their ability to stimulate industrial production”, he added.

In the Czech Republic, the automotive sector accounts for a quarter of industrial production. The statistics bureau said that component delivery problems in auto production had also started to affect related industries, such as tire producers.

The country’s largest exporter, automaker Skoda Auto, took two weeks off work in October due to global chip shortages, but said on November 24 that it had secured production for next month.

Last week, it said it was producing at around 75-80% of capacity with the resumption of the COVID-19 pandemic, another issue as workers are being left at home.

Its parent group, Volkswagen VOWG_p.DE, however, said the worst supply chain problem could be behind the automaker.

(Reporting by Jason Hovet; Editing by Catherine Evans)

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Laura T. Thrasher