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Wednesday, January 09, 2008

Hungary Industrial Output November 2007

Hungarian industrial production grew in November at a slower annual pace, raising concern about the recovery of the European Union's slowest-growing economy. Production rose 5.5 percent from a year earlier and 0.1 percent from October, the Budapest-based statistics office said. The annual rate compares with 5.9 percent in the previous month.

This fits in with the general slowdown picture we have been getting, and does not constitute a positive feature towards the outloook for Q4 2007 growth.

As Daniel Bebesi from Bank, Budapest says:

“The November data showed that the sharp drop in October was not an outlier, and this does not bode well for Q4 GDP growth at all."

I couldn't agree more. He also says this:

“In 2008 we expect slight pick up in case of the domestic sales and moderate decline in case of the export. A possible sharper slow down in the euro zone could severely endanger any kind of growth recovery in Hungary"

German output is evidently very important for Hungary, and we just learnt that manufacturing industry in Germany contracted in November from October, and in general the German economy is slowing considerably (please see this post today here). My feeling many optimists are trying to be positive, but are living in a parochial world which is completely out of touch with broader macro economic trends, and also fails to see why we should not be quietly waiting for some sudden "turnround" here. Things are going to get a good deal worse before they start to get better, and we should be recognising this openly now. The limit is what happens to the current account deficit when the demand for foreign currency loans peaks, and these inflows no longer compensate for the external investors pulling there money out. This is when push will really come to shove.

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