Mercedes plant to boost foreign trade, industrial output, analysts say

Automotive

Both Hungary's foreign trade figures and the industrial output data should get a boost with the start of production at the freshly inaugurated Daimler plant in Kecskemét (C Hungary), analysts interviewed by MTI said on Friday.

Hungary had a €690.1 million trade surplus in February, up from €419 million in January and down from €860.2 million a year earlier, the Central Statistics Office (KSH) said in a first reading on Friday morning. Exports fell 1.2% and imports rose 1.5% yr/yr.

February industrial output rose an unadjusted 1.1% and fell a workday-adjusted 3.4% yr/yr according to preliminary KSH figures. Output grew 0.8% from January according to seasonally and workday-adjusted data.

Gergely Suppán of Takarékbank said that after the weak data of the early months industrial output growth should start growing again from March partly due to weaker base figures and partly to certain improving German business confidence indicators.

Starting production at the end of March at the new Mercedes plant could have the biggest impact as some suppliers must have already started increasing their production earlier, which could have been the cause for the higher March PMI index, he noted.

Suppán predicted industrial output growth between 6-8% from April until the end of the year, and around 5% for the year as a whole.

In connection with the foreign trade data, Suppán said the faster import growth measured in euro terms is almost entirely due to the deterioration of the terms of trade, thus, net export continues to play a major part in GDP growth. Exports, just as industrial output, could be boosted by the starting production at the Mercedes plant from next month, he added.

Suppán predicted a foreign trade surplus of €7.8 billion for the entire year compared to €6.89 billion last year.

Zoltán Árokszállási of Erste said the industrial output data, and the 0.8% month-on-month increase in particular, were disappointing. He also believes the March figure could be better thanks to the starting of production at the Mercedes plant. He predicted expansion for the second half of the year, with 3.5% industrial output growth for the year as a whole.

Árokszállási said the foreign trade figures were clearly a negative surprise as the analyst consensus was for a February surplus of at least €800 million. He still expects last year's €7 billion surplus to widen slightly in 2012.

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