A strong start for September: retail sales and ÁKK

HUNGARY - In Brief 06 Sep 2023 by Istvan Racz

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To their credit, the government's various branches are not leaving much time for investors to feel bored about Hungary. First, July retail sales was reported this morning. In volume terms, on sda basis, sales fell by 0.2% mom and 7.8% yoy, after a 8.1% yoy drop in June. January-July was a rather unimpressive -9.9% yoy, but at least the comparison between this year and 2022 now looks better than in Q2, when retail sales actually fell by 10.7%, depressed by the extreme high basis generated by Fidesz' extraordinary and massive election campaign handouts a year ago. This may even sound moderately positive, but looking at the fixed-base monthly chart above, (Dec 2010 = 100, Source: KSH), it is quite evident that the last two months have brought about to stabilisation of retail turnover volume without any sign of a bounce-back, even in terms of an initial hint that one may be coming soon. To be fair, no one said that a bounce-back should come about already in July. But the authorities have said repeatedly that a marked recovery was due at some point in H2, primarily on account of decreasing inflation. So, one needs to be waiting a little more for that to happen. Second, the Treasury yesterday announced the successful launch of a €1.75bn 10-year bond, sold at 235 bps above euro midswap. This issue came together with an announcement by the ÁKK that the agency raised the government's net financing requirement to HUF4113bn from HUF3409bn (i.e. by 0.9%, to 5.4%, of GDP) for this year. The explanation for this move was a third announcement, that the government made an offer to buy 51% of Budapest Airport from a collection of current private sector owners, led by AviAlliance of Ger...