Economy
Weak GDP underwhelms National Bank of Hungary
The country's fourth-quarter GDP contraction was more acute than the central bank's expectation as was the fall in January's headline and core inflation figures, according to a written statement by Karvalits in response to Wall Street Journal.
Although disclosure of detailed figures on the consumption side of Q4 GDP has not yet taken place, short-term indicators suggest that the weaker-than-expected performance is mostly due to weak domestic demand, Karvalits said.
"All this indicates that the idle capacities of the economy could have a strong disinflationary impact; inflation pressures could ease significantly in the short term," he noted.
The extent to which Hungarian companies will be able to pass rising production costs on to consumers in a weak demand environment remains still uncertain; as a result, so is the mid-term inflation outlook, according to the NBH Vice President.
"The final conclusions [on the feed-through of higher production costs] can only be drawn after the publication of the March Inflation Report," Karvalits told the Wall Street Journal.
Although disclosure of detailed figures on the consumption side of Q4 GDP has not yet taken place, short-term indicators suggest that the weaker-than-expected performance is mostly due to weak domestic demand, Karvalits said.
"All this indicates that the idle capacities of the economy could have a strong disinflationary impact; inflation pressures could ease significantly in the short term," he noted.
The extent to which Hungarian companies will be able to pass rising production costs on to consumers in a weak demand environment remains still uncertain; as a result, so is the mid-term inflation outlook, according to the NBH Vice President.
"The final conclusions [on the feed-through of higher production costs] can only be drawn after the publication of the March Inflation Report," Karvalits told the Wall Street Journal.
