Industrial production in Hungary picking up again

Following the resumption of industrial production in Hungary, our colleague Krisztina Kovacs, Head of the Port of Hamburg Representative Office in Budapest, reports on current developments in the Hungarian economy.
 

• In April, exports in euro fell by 37% year-on-year and imports by 28%.
• The enormous decline is the result of a huge loss of production due to the coronavirus pandemic.
• The foreign trade balance shows a deficit of 611 million euros.

The economy had already expected weak results in April after corona-related production losses. Therefore, a strong decline in exports (-37%) was no surprise. In addition to measures to contain the pandemic, other factors also played a role in weakening the Hungarian economy, such as disruptions in supply chains, closed borders and reduced external demand.

Imports, in contrast to exports, show a smaller but still strong overall decline of 28 percent. The discrepancy is mainly due to unchanged domestic demand for consumer goods such as food, hygiene products etc. whereby imports from the manufacturing industry had almost completely ceased. Overall, the foreign trade balance shows an exceptionally high minus of 611 million euros.
 
Already from mid-May industrial production was largely resumed and the supply and production difficulties are abating. However, weakened global demand and a lower willingness to invest are still noticeable. Nevertheless, a recovery is expected in Hungary in the coming months.
 
Although the forecasts remain vague for all economic sectors for the time being, in its latest report, the World Bank estimates an economic downturn in Hungary of only 5 percent. Next year, the World Bank already expects to see a growth rate of 4.5 percent.