Hungary's April industrial output plunges, quashing hopes for fast recovery

BUDAPEST: Hungary's industrial output plunged by an annual 36.8pc in April, based on preliminary unadjusted data published on Friday, as the coronavirus pandemic sent the economy into free fall, with car factories virtually halting production.

Hungary's open economy depends on vehicle manufacturing, which all but halted in March when the pandemic began to spread in the central European country.

The Statistics Office (KSH) said the decline was especially significant in car manufacturing.

Electronics, food, beverage and tobacco products recorded smaller drops in output in April.

Analysts had predicted a 21.6pc drop in overall output

"My base-case projection is that the economy will shrink by around 4pc this, but this is now surrounded by strong downside risks," said Peter Virovacz, an analyst at ING.

He said production at the car plants was still not running at full capacity.

Car makers face supply-chain problems and limitations on demand and on exports, he said, which made a fast economic recovery impossible, even though retail sales data were not that dismal.

Retail sales fell 10.2pc year-on-year in April after a 3.5pc increase in March, data showed on Thursday.

The hardest hit sector, tourism, came to a standstill in April, with guest nights down 97pc in annual terms.

Germany's luxury carmaker Daimler and Japan's Suzuki, as well as Audi resumed limited production at their Hungarian units late in April.

They began to increase shifts at their factories only in the second half of May as the economy gradually opened up.

Analysts polled by Reuters last month expected the economy to shrink by 4.6pc this year, much worse than the government's forecast of a 3pc downturn.

On monthly terms, output fell by 30.5pc in April.