Is the drop in Hungary's industrial output only temporary?

Preliminary data from the Hungarian Central Statistical Office released on Monday showed that Hungary's industrial production growth slowed sharply at the start of the year.

The working-day adjusted industrial production index rose just 2.2 percent y/y following 6.8 percent increase in Dec much below expectations for a 5.7 percent growth.  This was the third decline in a row which means that four of the past six months have recorded negative month-on-month readings.

Longer-than-expected maintenance shut-downswing at key factories combined with peaking consumer confidence and an anticipated lull in EU funded investments has likely dampened January performance and the drop is likely only temporary. However, any loss of momentum in the German economy could further weigh on the downside.

"We forecast 2.2% GDP growth this year compared with 3% growth recorded last year. The January data support our view that the central bank will re-open the rate cutting cycle in Q2. We expect EUR-HUF to reach 325.00 by year-end." said Commerzbank in a report