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Trade Surplus, Industrial Output And Retail Sales Rise As Consumer Prices Continue To Sink In Hungary

Tamás Székely 2015.04.08.

Hungary posted a higher-than-expected trade surplus in February. The country’s trade surplus came to 935.4 million euros, the Central Statistical Office (KSH) said in a first reading of data. Exports rose by 7.4% to 7.290 billion euros while imports went up by 6.3% to 6.355 billion. In 2014, Hungary had a trade surplus of 6.4 billion euros, compared with 6.55 billion euros in 2013. K&H chief analyst Dávid Németh said the fresh data show dynamic development, with the increase in exports supported by accelerated improvement in European economies, especially in the automotive sector. TakarékBank analyst Gergely Suppán said the slight negative impact on export growth of the Russian food embargo would be countered by a pickup in new automotive and manufacturing capacity in the coming months. In a separate note to investors, he said: “We expect a firming of the forint in the medium term due to a spectacular improvement in the current and trade accounts.”

Meanwhile Hungary’s industrial output also grew by an annual 5.8% in February, but dropped by 0.3% from the preceding month, KSH said. Commenting on the figures, KSH statistician Miklós Schindele said that vehicle production continued to boost the overall figure, and the growth in this sector was even higher in February than in the previous month. At the same time, there was a significant drop in crude oil processing since stocks accumulated in previous months were being sold in February, he added. TakarékBank analyst Gergely Suppán said industrial output in the first months of the year may have been lifted by the launch of production of a new model at Japanese carmaker Suzuki’s plant in Hungary. Output could rise on base effects in the second half of the year, he added. He forecast full-year growth at 7%, down from 7.6% in 2014. K&H Bank chief analyst Dávid Németh projected full-year output growth of 5.7% and said the pace of growth could be supported by an improvement in European economies.

The Central Statistical Office has published fresh data on retail sales as well. According to KSH, retail sales in Hungary climbed by an annual 6.2% in February, based on preliminary data, down from an 8.2% annual rise in January. Adjusted for calendar year effects, retail sales were also up by an annual 6.2% in February. Food sales increased by 3.3% and non-food sales were up by 7.9%, while fuel sales increased by 11.1%. Analyst Gergely Suppán said the settlement of compensation from lenders under borrowers relief legislation would boost households’ disposable income and support the increase in retail sales. György Vámos, who heads the Hungarian Trade Association (OKSZ), attributed much of the increase in retail sales to the mandatory use of tills that are electronically connected to the tax office. He said the pace of growth could slow from previous months.

KSH also said that in March consumer prices in Hungary fell by an annual 0.6% following dropping by 1% in February. Emerging market analysts in London had forecast the March decline at between 0.5% and 1.1%. Household energy and fuel prices were behind the year-on-year decline in March, the former falling by 3.4% and the component which includes the latter by 4.4%. Food prices were flat, while the price of alcohol and tobacco rose by 2%. Inflation was 0.6% in March compared with the previous month. Core inflation, which excludes volatile fuel and food prices, was 1%. K&H Bank chief analyst Dávid Németh said the consumer price index could remain negative through to August, when it is expected to pick up. Year-end inflation is likely to be above 2% and average annual inflation at 0.1%, he said. Analyst Gergely Suppán said there was a lack of upward pressure behind core inflation and deflation could continue till August.

via and photo: public domain