Relatively good news today: industry, exports, sanction talks in the EU

HUNGARY - In Brief 09 May 2022 by Istvan Racz

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The first data since the start of the war is coming out. Industrial output fell by a marginal 0.1% mom seasonally and day-adjusted in March, which implies 4.1% yoy growth on the same basis. This is quite good, compared to Germany's -3.9% mom, -3.5% yoy, given significant vertical integration between Hungarian and German industries. Germany's industrial setback in March is no good news, of course; it is very possible that more weakness will be seen in Hungarian data as well in the forthcoming months. Anyway, even Hungarian industrial growth weakened somewhat in March: in Q1 total, output rose by 5.2% yoy in volume terms.A similar trend was seen in merchandise exports, which rose by 8.7% yoy in nominal EUR terms in March. Real-terms data is not available for now, but it appears that there was some weakening from the first two months of this year, when exports rose by 17.7% yoy in nominal EURs. This weakening is far from being dramatic for the time being, especially as import growth moderated as well, to 22.6% yoy in March from 31.9% yoy in January-February. It is quite usual that in case the thrust of manufacturing exports is weakening, then the expansion of imported inputs slows down as well. Anyway, a significant trade deficit is developing, because of the heavily increased cost of energy imports, and the strength of domestic consumer demand. Retail sales jumped by an unusually big 13.8% yoy, sda, in March (+8.5% yoy in Q1), in the wake of the massive fiscal election campaign gifts paid out in the previous month. This latter one must be a temporary phenomenon, of course.The other area of immediate interest is the development of sanction talks within the EU, especially ...