The outlook for Hungarian industry remains pessimistic with last month’s output improvement appearing to be an anomaly.
The volume of Hungary’s industrial production declined by 6.4% in July compared to the same period in 2023.
That’s the worst figure seen this year, according to working-day adjusted data published on Friday.
From June to July, meanwhile, the adjusted indicator didn’t change.
This comes after Hungary’s statistics office last month announced a year-on-year volume fall of 3.7% and a monthly rise of 0.5%.
“After the positive surprise in June, Hungarian industry was not quite able to maintain the momentum in July,” said Péter Virovácz, senior economist on Hungary at ING.
“We suspected that the June turnaround might be a blip, and it looks like it was …The only positive is that at least we have avoided a major downward correction.”
The year-on-year slump was driven by declines in the manufacture of transport equipment, electrical equipment, and computer products.
On the other hand, Hungary saw an uptick in the production of food, beverages, and tobacco products.
“Industrial production in Hungary has been on a declining trend since 2022…so in this sense, July’s data was expected,” Barna Szabó, chief economist at the Equilibrium Institute, told Euronews Business.
“On the one hand, the decline can be explained partly by the weak performance of the European economy, particularly German industry. On the other hand, vehicle- and battery production, areas that were at the centre of Hungary’s industrial strategy throughout the past year, are suffering globally due to weak demand and a slower than expected transition to electric vehicles.”
Ádám Czelleng, associate economics professor and founder of Rekon Partners, told Euronews Business: “According to the Ministry of Economy, this decline [in production] has been attributed to the ongoing conflict in Ukraine and the sanctions imposed by the European Union …The ministry also points to weaker economic performance in Germany … supported by the significant role of German investments in Hungary’s economy.”
While Hungary’s government has blamed the industrial stagnation on weak exports, underwhelming domestic consumption is also partially to blame.
