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City analysts: February drop in industrial output bigger than expected

  A fall in Hungary’s industrial output in February was bigger than expected, London-based emerging market analysts told MTI.

Industrial output plunged an adjusted 25.4% in February from the same month a year earlier, the Central Statistics Office (KSH) said on Tuesday.

The drop was well over a 23.0% estimate by analysts at JP Morgan’s London office. Though the analysts noted in a comment that Hungary’s Purchasing Managers Index showed some stabilization in March as the new order index grew and the stocks index fell. The positive turn may be related to an incentive program for new car purchases in Germany and could be only temporary, they added.

JP Morgan said the bigger than expected drop in industrial output prompted it to change its projection for the full-year contraction of Hungary’s economy from 4.5% to 5.5%. The fall in GDP “could well be in excess” of 6% if the government introduces new austerity measures, it added.

Standard & Poor’s already puts the drop in Hungary’s 2009 GDP at 6%. Bank of America-Merrill Lynch, on the other hand, sees the economy contracting 4.5% and Goldman Sachs projects a 4.2% decline. Fitch Ratings puts the contraction at 5%, still well under the 12% decline in GDP it forecast for Latvia. (MTI-Econews)