The growth of output decelerated in June, and ING’s LeadING HUBE economic indicator projects the continuation of this negative trend. According to the index, Hungary’s economy will perform well this year but could run out of steam by mid-2016.
Even though the stock of new contracts grew from the previous month, this could not stop the decrease in the total stock of orders. The substantial decline registered in June will make itself felt in the monthly dynamics of output at the end of 2015 and early in 2016. Household sentiment fell further, if only slightly, and the growth of industrial output could slow down in the next 10 months, ING said. This development heavily influenced the indicator, which forecasts a large decline in short-base growth figures.
On the other hand, the unfavorable trend will only appear in year-on-year output volume indices at a slow pace, due to the low base of last summer. “As a result, LeadING HUBE continues to confirm our forecast that economic growth remains dynamic this year," said András Balatoni, lead analyst at ING, adding that summer production breaks at car factories carry a significant downward risk during coming months. In a similar manner, downward risks have increased with regard to the outlook for next year.
What is LeadING HUBE?
ING’s LeadING HUBE indicator follows the ebb and flow of the economy relatively closely, even though it is made using data from 10 months earlier. This means that the indicator can forecast economic developments 10 months in advance. Although it does not forecast GDP, this strong correlation still makes it very useful as it can provide an early glimpse of upwards or downwards trends.
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