Industrial production grew a mere 0.2 percent in July compared to last year’s data after growing 2 and 8.8 percent in May and June respectively, according to the Central Statistical Office, reports 168óra.
Erste Bank’s leading macroeconomics analyst Gergely Ürmössy noted that previously analysts had anticipated a 7 percent increase in industrial output. July’s poor results might have been caused by outages in the automotive industry.
According to ING Bank analyst Péter Virovácz, July’s result is the worst in the past three years and the second worst in the past five. Virovácz noted that this is the second indicator after the poor performance of the retail sector that implies weaker than anticipated economic activity in the third quarter. While Virovácz said that one should not draw an early conclusion based on these data, he nevertheless called the results “not too promising”.
The analyst also stressed that should the detailed data show the automotive industry had indeed pulled back the whole industrial sector, it will make it clear that over-reliance on this industry leads to problems. It is not only the fact that car manufacturing represents 30 percent of the country’s industrial production that poses a threat, but related sectors might also face a decrease in demand and production due to the automotive industry’s halt, which could have a ripple effect throughout the industry.
This, according to Virovácz, highlights the one-dimensional nature of Hungarian industry. Nevertheless, he still believes that a roughly 5 percent annual increase in industrial production might be possible.