Hungarian Industry Reliant on Automotive Sector as Domestic Demand Shrinks

In this regard, only manufacturers related to the automotive industry are able to breathe any kind of life into Hungarian industry. At the same time, this confirms the picture of steadily shrinking domestic demand in the economy, which is also reflected in the latest retail sales data. The picture is therefore very clear: export sales are essentially able to compensate to some extent for the very weak performance of companies producing for the domestic market.

 

Volume of industrial production

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Going forward, we expect this dichotomy to persist. In this regard, order books show a similar picture, as export order books are holding up, while domestic order books have collapsed. The big question remains, how long can the export momentum last given that recent PMIs and other surveys across the globe suggest that manufacturing activity is weakening again and that order books are shrinking worldwide?

The expected positive impact of the reopening of China has largely failed to materialise, and the high global interest rate environment is increasingly dampening domestic demand in the developed world. These dynamics have a clear negative impact on both the current situation and the outlook for Hungarian industry.