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Important data will come on Friday morning
At home, the CSO will publish its latest GDP estimate for the first quarter at 9 a.m. on Friday morning, but at the same time similar data will be released in most countries in the region. Secondary data is already known for industrial production, retail, and foreign trade, so perhaps analyst estimates have become more reliable.
According to weekly forecasts released earlier in the week, the first quarter growth of the Hungarian economy in the region may have been the most favorable.
According to Erste Bank experts, the Czech and Slovak economies may have declined by 3-4% in the first three months of the year, while Romanian, Polish and Hungarian GDP may have remained positive. Furthermore, Hungary may have been the best, according to analysts, economic growth may have been 2.6% year-over-year after 4.5% in the fourth quarter of last year.
According to experts, in Hungary and Romania in particular, the continued positive contribution of retail sales may be due to relatively favorable data, the Polish economy could have felt the closings much more through industry and consumption, so growth could have slowed to 1.2%.
In the case of Hungary, it is also emphasized that industry and construction may have stagnated in the first quarter, while services still supported growth. On the consumption side, retail sales may have contributed positively to growth and exports may have had a neutral effect.
JP Morgan analysts released their latest forecast quarterly, but this also shows that the Hungarian economy has so far been able to overcome the crisis in the cheapest region. According to experts, after growing 3.9% in the fourth quarter of last year, the economy may have fallen 5% in the first three months of the year. Meanwhile, the Czech and Polish GDP could fall 10 percent and the Romanian 13 percent.
According to experts from the American investment bank, the Hungarian economy may shrink 6.3 percent a year in 2020, and then recover from the current crisis by 20 percent in 2021.
It also shows that the first quarter will not be truly authoritative in terms of year-round economic performance, as the really serious closings began in mid-March, meaning that their impact will be minimal on current data. Experts expect a really serious decline in the second quarter, when the effects of full April and partial May closings will already be visible. After that, the biggest question will be how fast the economy will recover, and optimistic scenarios suggest that the rebound may come in the third and fourth quarters.
Until now, the MNB forint strengthening operation has been successful
Among regional currencies, the forint strengthened further against the euro in the past week, and the Czech koruna and the Polish zloty weakened last week. According to Erste, as long as international sentiment remains positive and the MNB sterilizes additional liquidity with a weekly deposit of 0.9%, however, the forint’s relatively good performance can be maintained.
We must not forget that the Hungarian central bank was recently the loosest in the world.
Bank experts expect a moderate weakening of the Hungarian currency by the end of the second quarter, so we can prepare for the euro exchange rate around 355 in the summer, and then around 350 in the second half of the year.
JP Morgan has also recently updated its forecast for the forint, and the good news for us is that its previous forecast of almost 400 has improved significantly in terms of the forint. An exchange rate of 355 euros is also forecast for the summer, then the forint may weaken again to 365 by the end of the year. Previously, in early 2021, an exchange rate of 392 was expected, now it has been changed to 365.
Cover image: Getty Images
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