Hungarian Industry Output Growth Slows on Weaker Domestic Demand
Hungarian industrial output growth slowed in October for the first time since March as weaker domestic demand offset the impact of expanding exports.
Production advanced an adjusted 8.3 percent from a year earlier after 10.9 percent in September, the statistics office in Budapest said in a preliminary report today. The median estimate of 10 economists in a Bloomberg survey was 9.7 percent. Output fell 1 percent on the month.
The first European Union member to get an International Monetary Fund-led bailout in 2008, Hungary cut spending to meet the terms of its loan. The measures reduced local demand and the country is looking to the euro region, which buys 60 percent of products made or assembled in Hungary such as Audi cars and Nokia phones, to support its recovery.
“The growth of domestic sales slowed in October, especially in the key areas of energy and food production,” statistician Miklos Schindele said. “Exports continued to grow, however, overall production still needs to expand for months to reach pre-crisis levels,” he said. Output is some 15 percent lower than the pre-crisis peak in first quarter of 2008, Schindele said.
Hungary exited its recession in the fourth quarter of 2009 and growth accelerated in the first three months of this year. Quarterly growth halted in the second quarter, when gross domestic product was unchanged from the first quarter.
The economy shrank 6.3 percent last year as exporters including the local units of Alcoa Inc. and Suzuki Motor Corp. scaled back output to cope with faltering global demand. The government expects GDP to grow 0.8 percent this year and 3 percent next year.
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