JP Morgan cuts GDP forecast for Hungary, CEE
Hungary's economy, along with its Central and Eastern European peers, is facing a slowdown in the headwind of a struggling eurozone and the Ukraine-Russia crisis, London-based emerging markets economists said yesterday.
In a markedly revised update released to investors in London, JP Morgan said that downward revisions to its Euro area and emerging markets growth forecasts have prompted it to lower its GDP growth forecasts for Central Europe. It said it has shaved off 1 percentage point from its average GDP growth forecasts for the third quarter of this year for the CEE region, including Hungary, due in part to the "unexpected collapse" in the August industrial production data.
The firm also reduced its regional forecast for the first half of 2015 by 0.5 percentage points on average. JP Morgan now expects Hungary's economy to expand at a rate of 2.2% in 2015 against its previous forecast of 2.5%. "Idiosyncratic factors plus lower 2015 oil price assumptions have spurred the changes, mostly downward, in our EMEA EM 2015 growth forecasts (...) Although Central European countries are net energy importers and will benefit from lower oil prices, weaker growth in the Euro area and Russia will dampen demand for CEE exports".
The deceleration in Chinese growth will also contribute to weaker export growth, mainly indirectly. "The regional slowdown, in our view, has (also) been related to the direct and indirect negative spillovers from the Russia-Ukraine crisis, which we now expect to remain unresolved through 2015", JP Morgan's London-based economists said.
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