Analyst: Industrial output slump unsurprising

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Confirmation of Hungary’s 4.7% overall drop in industrial output in July, released by the Central Statistical Office (KSH) yesterday, was unsurprising, especially in light of weaker performance in Germany, CIB Bank Senior Analyst Sándor Jobbágy said in a commentary sent to the Budapest Business Journal. The first release of data on September 6 had earlier surprised pundits as the market consensus expected a 2-3% rise for the month.

“It is still unsure how long the tendency will continue,” Jobbágy said, highlighting that clearer predictions about Hungary’s industrial outlook could only be made after figures for September and October are released.

“Figures for September and October can paint a brighter picture of Hungarian industry’s performance, when the production breaks of the summer period no longer have an effect on figures,” the analyst explained. 

However, Hungary’s dependency on the automotive sector can be identified as a risk, for both its direct and indirect effects.

“The weight of the automotive industry is a significant risk in terms of the Hungarian economy, as almost half of the country’s GDP is determined by overall industrial output, in which the automotive industry plays an important role,” according to Jobbágy. “Together with a significant number of suppliers, automotive firms in Hungary are also important in terms of employment,” he added.

“The degree of this risk is well illustrated by Hungary’s export figures: the automotive industry accounts for almost 40% of the processing industry, and despite the increasing weight of domestic consumption, the role of exports has still stayed significant for the overall economy,” the analyst pointed out.

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