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Recession deepens as export demand drops

Hungary's GDP has declined since the second quarter of 2008, and dropped at an accelerated rate of 2.3%, quarter-on-quarter, in Q1 mainly because of a drop in export demand, the Central Statistics Office (KSH) said in its monthly summary published on Thursday.

First-quarter GDP fell 6.4% yr/yr, KSH said in a first reading, after contracting 2.5% in the previous quarter. The seasonally- and calendar year-adjusted decline was 4.7%.

Industrial output fell 22.3% yr/yr in January-March, including a 15.6% yr/yr drop in March. The calendar year-adjusted decline in March was 4 percentage points steeper, partly because of a high base. Domestic sales fell 6.9% yr/yr in January-March, but industrial export sales plunged 26.2%. Labour productivity in industry was 15.5% down, in spite of an 8.3% smaller workforce.

New industrial orders were down 15% yr/yr in March and total order stock slipped 19%.

As a further sign of recession, Hungary's energy consumption dropped 8% in Q1 from the same period a year earlier.

The construction industry contacted 4.1% in January-March, in spite of a 3.5% yr/yr increase in March. The building construction segment contracted 7.9% yr/yr in January-March, while the civil engineering segment grew 2.8%. Building orders fell 25% down and civil engineering orders dropped 40%.

Industrial producer prices climbed 9.1% yr/yr in March and rose 7.7% yr/yr in Q1 as domestic industrial sales prices increased 4.9% and forint-term export prices (including the effect of a 13% weakening of the forint against the euro) rose 9.7%.

Producer prices in the construction sector rose 4.1% yr/yr in Q1. Producer prices in the farm sector fell 29%, mainly due to a high base - prices rose 37% in the base period.

Consumer prices were up 3.4% yr/yr in April, picking up from a 3.1% yr/yr rise in Q1 and a 2.9% yr/yr increase in March. Before accelerating in April, growth in consumer prices had slowed since May 2008.

Gross wages rose 0.3% and net wages were up just 0.2% in Q1 from the same period a year earlier, resulting in a 2.8% fall in real wages. (MTI-ECONEWS)