The volume of Hungary’s industrial production rose 2.5% month on month in December 2018, the Central Statistical Office (KSH) reported on Thursday. The zigzags of the production curve shows an overall ascending course, even if the expansion in the whole of last year was not outstanding.
As a result of the 2.5% m/m growth, the 12-month index (adjusted for working days) edged up to 5.7%. Looking at the data series from a distance we find that IP has been growing unevenly but continuously.
The fourth quarter turned out well for the sector therefore there is a chance that it’s contribution to Q4 GDP growth was substantial. The first estimate on Hungary’s economic performance in October-December 2018 will be released next week. On the basis of volume data, industry could have contributed 0.5 percentage point to quarterly growth and 1.0 ppt to annual growth. (Note, however, that the estimation of added value from volume data is not going to be precise in any case.)
Despite the strong IP performance at the end of last year, annual volume growth was not outstanding in 2018. Annual average growth reached only 3.6% yr/yr vs. 4.7% in 2017. 2016 was the only year in the last five when annual average growth was even weaker than this, and at that time EU transfers for Hungary were scarce.
We are facing a lot of uncertainties this year. The European economy (Germany’s industry included) had a bad start in 2019. The question is how lasting this feeble performance will be and how successfully Hungary’s industry can insulate itself from such impacts. Péter Virovácz, chief analyst at ING Bank in Budapest, has a cautiously optimistic forecast:
as new capacities will be added in 2019, industry will be once again capable of growing by 4-5%, although there is no doubt that risks are more to the downside.
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