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Analysts see industrial output growth accelerating further

Industrial output growth could accelerate further yr/yr in the coming months due to export growth and a low base, according to analysts polled by MTI.

Figures published by the Central Statistical Office (KSH) show industrial output growth was 2.8% yr/yr in March 2010. Month-on-month, industrial output was down 0.4% in March.

Zoltán Török of Raiffeisen Bank said the detailed March figures show industrial production continues to be driven by exports, while domestic sales are falling.

He noted that the sectors that had a very bad March twelve months ago showed the best performance this time round, with the index pushed higher by exports of companies in the automotive and computer industries.

Török emphasized that industrial output growth could accelerate in the next quarter, possibly exceeding 8%c in the coming months. Towards the end of the year, however, growth could slow down to 5%-6% due to weakening export demand. Török said external demand can be expected to be far weaker in the next 1-2 years than its current level.

Török said he expects industrial output growth of 6pc on average for this year. Due to the better-than-expected first-quarter GDP figures, he also revised his earlier GDP forecast to 1% for the end of this year.

Dávid Németh of ING Bank also expects to see accelerating industrial output growth in the coming months, almost entirely due to the low base.

He emphasized that the latest m/m figures show a stagnation of industrial output and attributed any growth to the trough of the previous year.

Németh said that while industrial output could grow faster next month, growth could slow down again from the second quarter. He also said he expects external demand to decline in the coming years due to tighter budgetary policies.

Németh forecast 5% annual average industrial output growth for this year. He did not revise his earlier GDP expectation over the better-than-expected Q1 GDP figures, still expecting to see 0.5% GDP growth this year. (MTI – Econews)