Hungary’s recession deepened in the fourth quarter as austerity measures hurt domestic demand, a drought hit agriculture output, the euro region’s debt crisis weakened exports and western banks withdrew funding.
The economy shrank 0.9 percent in October-December from the previous three months for a fourth consecutive quarterly drop. Gross domestic product fell 2.7 percent compared with a year earlier, the most in three years, the statistics office in Budapest said today in a preliminary report. Economists in a Bloomberg survey expected a 1.9 percent drop from a year ago.
While the government on Jan. 25 said that the economy may grow more than the forecast 0.9 percent this year as car production and agriculture output rise, the International Monetary Fund on Feb. 11 said it may stagnate in 2013.
“Industrial and agriculture output, domestic consumption and exports all dropped and contributed to the recession,” statistician Pal Pozsonyi told reporters today.
Hungary is in its second recession in four years as trade and banking links with the slumping euro area drag down growth. Foreign lenders forced to pay Europe’s largest bank levy are withdrawing capital and funding, restricting credit. Measures to cut the budget deficit to avoid a freeze in European Union development funds have hurt business and consumer confidence.