Hungary Industry Output Shrinks for Sixth Month in MarchZoltan Simon and Andras Gergely
Hungary’s industrial output shrank for a sixth month in March as the government struggles to pull the economy out of its second recession in four years.
Production fell a workday-adjusted 0.7 percent from a year earlier after a revised 1 percent drop in February, the Budapest-based statistics office said today. That compares with a median estimate for a 0.9 percent drop in a Bloomberg survey of nine economists. Output rose 0.4 percent from February after a revised 0.1 percent increase the previous month.
Hungary entered recession in 2012 as trade and banking links with the slumping euro area, as well as the government’s focus on narrowing the budget deficit by levying extraordinary taxes, smothered growth. Prime Minister Viktor Orban, facing re-election in 2014, predicts the economy will grow 0.7 percent this year.
“All sectors showed a decline except for car production, where we saw growth,” statistician Miklos Schindele told reporters. “Industrial production continues to be unfavorable.”
The central bank last month started a Funding for Growth plan, modeled on the Bank of England’s Funding for Lending Scheme, to spur economic expansion by boosting lending to small and medium-sized companies.
Orban sacrificed growth to keep the budget deficit within the European Union’s limit of 3 percent of gross domestic product and remove the threat of cuts in funding from the bloc.
His policies included retroactive extraordinary taxes on energy, retail and telecommunication companies as well as Europe’s highest bank tax, which have damaged investment and reduced the economy’s potential growth rate to near zero, according to government estimates.