K&H Analyst Commentary: Hungarian industry continues to decline

Hungarian industry performed poorly in August this year as well. Production volume fell by more than 7 percent year-on-year according to raw data, and the decline was 4.6 percent based on working day adjusted data. Moreover, the decline was 2.3 percent compared to July.

Dávid Németh, K&H’s chief analyst, said that the holidays in July and August significantly affect production trends every year. The current data can also be considered weak, partly because the base was also low, as production volume was declining year-on-year in August last year as well.

“Long-term data also show a weakening trend. In August this year, production volume fell more than 8 percent below the 2021 monthly average. This indicator, apart from minor fluctuations, has been gradually decreasing for two years,” he added.

Speaking about the outlook, he said that based on order books, a significant rebound is not expected this year. Ongoing factory construction and development projects, such as the BMW factory in Debrecen, could improve industrial statistics. However, only a surge in production can give the sector a more significant boost, which can only be expected next year. The BYD factory in Szeged is also expected to make a significant contribution to the sector’s production next year or rather in 2027.

“Of course, the development of the foreign environment through exports is key. The question is how much growth the European economy can achieve next year. Within this, it is particularly important how the expected fiscal stimulus will affect the German economy. This could significantly affect the results of Hungarian industry”

– said Dávid Németh. The expert expects Hungarian industry to end this year with a decline of around 3.5 percent, and a slightly positive result is also possible in 2026.”