🐂 Not all bull runs are created equal. November’s AI picks include 5 stocks up +20% eachUnlock Stocks

WRAPUP 1-Hungary output plunges, Slovakia seen in recession

Published 04/07/2009, 10:34 AM
Updated 04/07/2009, 10:40 AM
KBC
-

* Hungary output down 28.9 pct in Feb on poor exports

* Slovakia sees first ever recession

* Euro zone outlook bleak

By Balazs Koranyi

BUDAPEST, April 7 (Reuters) - Hungary's industrial output plunged in February while Slovakia said its economy would slip into recession for the first time as the global economic crisis took its toll on central Europe's export-driven economies.

Grim data and forecasts out of the region came as the EU statistics office Eurostat lowered its fourth-quarter gross domestic product figure for the euro zone [nL7385877] and as British industrial output suffered its biggest annual drop in February since records began 40 years ago. [nL7506509]

Hungary, which relies heavily on exports to the euro zone, said its output fell by an annual 28.9 percent in February based on unadjusted figures, after a 22.9 percent drop a month earlier as both exports and domestic sales imploded.

The fall was faster than analysts' expectation for a 23 percent drop and some said it indicated that forecasts for gross domestic product will have to be revised to show an even deeper contraction this year than the 5-6 percent now expected.

"Industry gives 25 percent of the supply side in GDP, so this will alone warrant the 5-6 percent recession now expected for Hungary," KBC analyst Gyorgy Barcza said.

"It may be even worse, at around 7 percent if the growth stimulus fails in Europe in the second half, but probably it will help to avoid this," he added.

The EU's eastern bloc -- an engine of growth in recent years -- has seen its prospects slide since late last year as worries over external financing and the evaporation of capital in the credit crunch took their toll.

Hungary, Latvia and Romania have all already sought aid from the IMF in the crisis, but hopes have grown that last week's injection of funds by the Group of 20 into the Fund could help draw a line under the region's troubles.

SLOVAK RECESSION

Yet even if the concerns over financing ease, analysts say collapsing demand in the euro zone signals there is unlikely to be any quick turnaround even for stronger-performing economies like Poland and the Czech Republic.

Slovakia's central bank said on Tuesday the euro zone newcomer's economy would suffer its first economic contraction in 2009 as export markets suffer. It saw GDP down 2.4 percent this year, against a previous forecast of 2.1 percent growth. It said the economy would recover to grow 2 percent in 2010.

"There has been a change of view on the development of Slovakia's economy," NBS Vice-governor Martin Barto told a news conference. "The main feature is that Slovakia will swing into recession this year."

Slovakia has not had negative economic growth since it emerged as an independent state in 1993 following the peaceful break-up of Czechoslovakia, although growth slowed last year to 6.4 percent from a record high of 10.4 percent in 2007.

Budapest's Central Statistical Office said the February drop may be bigger than any fall Hungary's industry suffered after the collapse of Communism, although a direct comparison is not warranted as methodology has changed significantly.

Output in February suffered on a broad-based drop in exports, especially cars, which fell by around a half.

"Looking ahead, we have no reason to be optimistic as PMIs, other survey-based leading indicators and order books all hint at continuing weakness in European industry," MKB analyst Zsolt Kondrat said.

(Reporting by Balazs Koranyi and Peter Laca; editing by Patrick Graham)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.