Economies across the region have absorbed the impact of tariffs introduced by the U.S. last year, supported in part by strong intra-regional trade within the European Union’s common market. According to economists, roughly half of the region’s trade takes place within Central and Eastern Europe, helping cushion the effects of external shocks. Low labor costs Relatively low labor costs have also continued to attract foreign investors, particularly manufacturers from Western Europe seeking cost-efficient production bases. Still, vulnerabilities remain. Rising competition from Chinese carmakers is increasing pressure on the region’s automotive sector, a key driver of growth in countries such as Slovakia and the Czech Republic. At the same time, economic stagnation in Germany—the region’s largest trading partner—poses a potential downside risk, given deep supply-chain integration.