Hungarian economy unexpectedly shrinks as EU funding dries up
By Zoltan Simon
By Zoltan Simon
Hungary’s economy unexpectedly had its first quarterly
contraction in four years after a plunge in European Union funding. The forint
dropped to a four-month low against the euro.
Gross domestic product shrank 0.8 percent in January-March
from the fourth quarter after a 0.6 percent gain in the previous three months,
the Budapest-based statistics office said in a report on Friday based on
preliminary data. The median of five estimates in a Bloomberg survey was for an
increase of 0.4 percent. Growth was 0.9 percent from a year earlier, the
slowest since 2013.
“Construction plunged by almost 30 percent as EU funds dried
up,” cutting government orders that had buoyed the sector, statistician
Zsuzsanna Boros told reporters. In addition, car manufacturers also cut
production, she said.
The downswing is exposing the weakness of policies
championed by Prime Minister Viktor Orban, who regularly touts Hungary and Eastern
Europe as the continent’s growth engine and has questioned his western
neighbors’ approach to escaping economic stagnation. In Hungary, growth is
sputtering after a drop in EU funding, which accounted for almost all public
investments in the former communist nation.
The forint was down 0.2 percent to 315.98 versus euro at
9:25 a.m. in Budapest after touching a four-month low following the publication
of the GDP data.
“Household spending has likely remained fairly stable,
though today’s release suggests that it was weaker than retail sales prints had
suggested,” Marcin Kujawski, a Warsaw-based economist at BNP Paribas SA, said
in an e-mailed report. “We expect the pattern of poor capital spending and
decent private consumption to continue in the quarters to come.”
No comments:
Post a Comment