Macroeconomic Forecast Hungary

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Hungarian industrial production contracted by a shocking 27.1% y-o-y in April, compared to a reduction of only 15.6% in March, although the Central Statistical Office points out that the April collapse was exacerbated by calendar effects. Moreover, national accounts data showed real GDP contracting by 6.7% y-o-y in Q109 - worse than the -6.4% growth figure suggested by the earlier preliminary estimate. With retail sales and construction output also posting consistent negative growth over recent months, this confirms our view that Q209 will have witnessed a similarly weak economic outturn, and we hold to our view for real GDP to contract by 6.4% this year and grow by only 0.1% in 2010.