(Bloomberg) -- Hungarian industrial production declined more than forecast in November, raising concerns about the country’s recovery from a recession in the fourth quarter.
Output dropped an annual workday-adjusted 2.9% compared with a 3.1% decline in October, the Budapest-based statistics office said on Thursday. The November print was worse than the median estimate of a 2.1% drop in a Bloomberg survey. In contrast, retail sales grew an annual 4.1% that month.
Industrial production has shrunk each month since March, underscoring Hungary’s reliance on the ailing German economy, particularly the car industry. Prime Minister Viktor Orban is counting on three new local plants — those of BMW AG, BYD Co. and Chinese battery maker CATL — going into operation this year to help kick-start the economy.
Those expectations are fraught with risks amid political instability and economic weakness in Germany as well as uncertainty about the tariff policy of the incoming US administration of Donald Trump.
The government and the central bank in the meantime are limited by a strained budget and a weak currency in their efforts to stimulate the economy a little more than a year away from the next parliamentary election. Orban’s party, which has been in power for almost 15 years, is trailing in most polls amid voter anxiety about a cost-of-living crisis.
The currency is trading close to a two-year low against the euro, which has forced policymakers to halt monetary easing even with the benchmark interest rate at 6.5%, among the highest benchmarks in the European Union.
The cabinet has struggled to unlock about €19 billion ($19.6 billion) in EU funds still frozen due to graft and rule-of-law concerns, though it’s managing to finance the economy from the market. The government sold €2.5 billion in euro-denominated bonds this week.
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