Hungary’s industry outperforms despite capacity crunch in automotive sector

Hungary’s industry outperforms despite capacity crunch in automotive sector
By bne IntelliNews February 7, 2022

The output of Hungary's industrial sector rose 5.8% y/y in December, the fastest rate since the summer, showed data released by the Central Statistics Office (KSH) on February 4. Adjusted for the number of workdays, output rose 3.6% and by 0.1% from the previous month. For the full year,  output climbed 9.6% albeit from a low base.

KSH said output of all branches of manufacturing increased in December except for the automotive sector – the segment with the biggest weight – which continued to be impacted by capacity restraints caused by the global semiconductor shortage.

This is still weighing on Hungary's leading economic sector, but the strong performance of other segments has counterbalanced that, according to analysts.

Industrial output grew 1.5% q/q in Q4, giving a positive boost to the quarterly GDP. The first reading of Q4 GDP data will be released on February 15.

The semiconductor shortage could remain an issue for some time and output could "improve gradually", leading to a "marked bounce back" in H2, according to Takarekbank analyst Gergely Suppan.

He put industrial output growth at 5.5% for 2022, supported by base effects and new capacities in the industry.

ING Bank chief analyst Peter Virovacz said output "practically stagnated" compared to the jump in November and suggested the drop in the automotive segment output may have been even bigger than earlier declines.

Hungary’s industrial sector could show dynamic growth that isn't driven in large part by base effects if smaller branches continue their strong performance, and if supply chain problems ease from the second half, he added.

Hungary’s industry showed broad-based growth in 2021, which could help lift full-year GDP to 6.8-6.9%, Finance Minister Mihaly Varga noted.