Hungary December Industry Production Shrinks as Car-Making DropsAndras Gergely
Hungary’s industrial output declined in December as an expansion in car production reversed, signaling the nation’s recession probably extended into the fourth quarter.
Production fell a workday-adjusted 3.4 percent from a year earlier after a revised 7.1 percent plunge in the previous month. That compared with a median estimate for a 4.5 percent drop in a Bloomberg survey of 15 economists. Output fell 2.5 percent from November, the statistics office in Budapest said today.
Hungary is battling its second recession in four years as trade and banking links with the slumping euro area smother growth. The economy shrank for a third consecutive quarter in the July-September period as measures to cut the budget deficit to avoid a freeze of European Union funding damped consumption and hurt confidence.
“All sectors are declining, as before, but now vehicle production too, which up to now kept industry alive,” statistician Miklos Schindele told reporters. The drop in car-making also hurt exports, which had also been the main engine of growth, Schindele said.
Industry output fell 4 percent in the last quarter of 2012 compared with July-September, the worst quarterly performance since the start of 2009, Schindele said.
Hungary’s expected increase in investments and consumption will create a “turning point” for the economy in 2013, which may expand after a recession last year, Economy Minister Gyorgy Matolcsy wrote in his weekly column in Heti Valasz today.
Rising car production, EU funding for investments, increasing household consumption after a cut in utility prices as well as lending from commercial banks may contribute to the expansion, Matolcsy said.
The economy shrank 0.2 percent in July-September from the previous three months and fell 1.5 percent from a year earlier.
Hungary plans this year to “fix growth,” which lags behind the expansion rate of its central European peers, Prime Minister Viktor Orban told business leaders in Budapest on Feb. 5. The economy is showing “hopeful signs,” including on public debt and trade, Orban said.