More signs of life in Hungary’s economy
The desk views the recent uptick in Hungary's industrial and retail sales as a substantial indicator of improving economic conditions, with both sectors posting positive surprises in September. This growth is expected to be supported by internal factors such as increased consumer confidence and rising disposable incomes, as noted in the recent report from ING . The most significant metric is the 8.2% year-on-year growth in industrial production, outperforming expectations and suggesting that the previous inconsistent patterns in output may have stabilized. As Hungary approaches the end of the year, this momentum could influence the HUF's performance against major currencies, especially if external challenges are navigated effectively.
What the desk is arguing
The desk frames this as a developing narrative of recovery in Hungary's economy, highlighted by unexpected growth in both industrial production and retail sales. Per the full note from ING, September saw industrial production outpace forecasts at 8.2% year-on-year, suggesting a rebound from prior weaknesses.
Furthermore, retail sales have recovered from a slump in August, propelled by strong consumer sentiment and better-than-expected wage dynamics, reinforcing the potential for sustained domestic growth through the remainder of the year. The consistent monthly increases in production volumes further support this outlook, breaking previous patterns of fluctuation.
Where it sits in our coverage
Our current consensus target for EUR/HUF is 1.075, reflecting a range from 1.04 to 1.12. Specific targets include:
This view aligns closely with jpmorgan, which expects a degree of currency stability in the short term as economic indicators support the HUF's resilience. However, it sits near the mid-range of the spread given bofa's relatively bearish position.
How other firms see it
Firms like jpmorgan and hsbc are aligned with the positive sentiment regarding Hungary's economic rebound, focusing on the industrial sector's growth dynamics. Conversely, bofa presents a more cautious stance, highlighting potential external vulnerabilities that could impact the HUF's stability.
Watch pairs like EUR/HUF and CHF/HUF, as shifts in regional sentiment towards Hungary's growth narrative could correlate with moves in these currencies, particularly in response to European Central Bank policies.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Hungary's industrial production rose 8.2% YoY, indicating robust economic recovery.
- 02Retail sales have also rebounded, driven by strong consumer confidence.
- 03Positive internal factors support the outlook for sustained growth.
- 04Potential external risks remain a concern for overall economic stability.
Market implications
Traders should monitor the EUR/HUF pair closely as the positive economic data could push prices towards our consensus target of 1.075. Additionally, any signs of external economic pressure could create volatility as market participants adjust expectations based on Hungary's growth trajectory.
Risks to this view
The key risks to this bullish outlook include potential shifts in global economic sentiment that could affect Hungary's export-driven sectors. Unforeseen geopolitical tensions or shifts in major trading partners could force a reassessment of Hungary’s economic prospects, negatively impacting the HUF.
Articles More signs of life in Hungary’s economy Published 13:41 Hungary Translate Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Both industry and retail sales expanded in September. Positive surprises appeared in both sets of data. As Hungary’s growth is expected to be supported by internal factors, the external influence remains the only question mark in the recovery story Peter Virovacz and Zoltán Homolya Industry and retail sales surprised to the upside in September.
We think both sectors will contribute positively to economic growth as we head into year-end The Hungarian Central Statistical Office (HCSO) has released September data on retail sales and industrial production. As we move closer to the end of the year, it is becoming increasingly clear that both sectors are set to contribute positively to economic growth, in line with our expectations. Industrial production maintained its recent growth momentum, reaching a level not seen in two and a half years.
Retail sales also rebounded after August’s negative surprise, despite elevated fuel prices. Strong consumer confidence and rising real disposable incomes are expected to keep consumption on an upward trend in the coming months. New capacities are pulling up Hungarian industrial production 8.2% Industrial production (YoY, wda) ING estimate: 5.7% / Previous: 8.8% Hungarian industrial performance delivered a significant positive surprise in September.
Based on the pattern observed in recent months, a monthly decline had been expected. Instead, industrial production volumes increased by 0.9% month-on-month in the ninth month of the year. Owing to last year’s low base, the working-day-adjusted year-on-year index jumped to 8.2%.
The positive momentum continued for a third consecutive month, suggesting that the previous sawtooth pattern may finally have been broken. As a result, the fixed-base index relative to the 2021 average moved into positive territory in September for the first time in more than two years, in line with our earlier calls. After more than three years of decline and recession, this marks an important milestone in the industrial recovery.
Volume of industrial production Source: HCSO, ING "> Source: HCSO, ING As this is a preliminary data release, HCSO has not yet disclosed many details. Based on its brief commentary, the now-familiar pattern of concentrated growth remains in place. With new automotive production capacities coming online, vehicle manufacturing performed exceptionally well, as did the manufacture of computers, electronic and optical products, supported by rising electronics orders linked to the AI boom.
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