Opel to move production from Germay to Hungary

Troubled car maker Opel will move production of engines and transmissions from Russelsheim, Germany, to its plant in Hungary, German daily Frankfurter Allgemeine Zeitung reported on Tuesday. The move is part of Canadian automotive industry supplier Magna's strategy for the company. Earlier in September, General Motors agreed to sell a 55% stake in Opel to a group led by Magna. As a result of the move, 1,400 of the 14,700 workers at the plant in Russelsheim, Opel's biggest in Europe, will be laid of. Hungary is in contact with the German trade ministry on Opel's engine plant in Hungary, state secretary at the National Development and Economy Ministry Zoltán Mester told MTI a week earlier. Factory closures should not be based on politics, but on professional considerations, he said, adding that the plant in Szentgotthárd, near Hungary's border with Austria, is one of Opel's most efficient production operations. The plant is the sole maker of 1.6- and 1.8-liter engines for Opel.

(Source: Hungary A.M., 09/23/2009, pg. 1.)

Budget deficit target unchanged

The Finance Ministry expects the budget deficit to grow to Ft 1,068 billion by the end of this month, state secretary Tamás Katona announced on Thursday.

The ministry announced on Monday that the August budget deficit was Ft 98 billion, raising the shortfall for the first eight months to Ft 914 billion.

Katona acknowledged that tax revenues were less than expected last month but were higher than one year earlier, as higher VAT rates came into effect in July.

The ministry forecasts a budget surplus for the fourth quarter, which will lower the full-year deficit to Ft 992 billion, or 3.8% of GDP.

The local government sector could end the year with a Ft 60 billion deficit, compared with the Ft 130 billion forecast for the year, Katona noted. In cash-flow based budget accounting, this could lower the deficit by 0.2% of GDP. The target by this measure is 4.1%, Katona said. The budget deficit target based on the EU-backed ESA-standards will not change and remains 3.9% of GDP.

Hungary's economy reached bottom in the second quarter and the pace of decline could slow, Katona added. He said economic growth is not expected to return before the second half of 2010.

(Source: Napi Gazdaság, 09/11/2009, p. 1-2.)

Hungary could be next to get the euro

Hungary could be the next Central European country to adopt the euro, according to investment bank JP Morgan, as it has the best chance of reducing the budget deficit to the required level within a reasonable period.

The recession, the deterioration of public finances, along with pressure on local currencies has hurt the chances of Poland, the Czech Republic and Hungary of meeting the targets for euro adoption, JP Morgan noted. All three countries could adopt the euro in 2014-16, but Hungary has a lead over these two countries, according to the report.

(Source: Napi Gazdaság, 09/11/2009, p. 2.)

GKI: downturn bottomed out in summer

Hungary's economic downturn bottomed out in the summer and GDP is likely to fall 6.5% for the full year, economic think tank GKI said in its latest projection, prepared with the cooperation of Erste Bank. Although Hungary's GDP fell a bigger than expected 7.6% in Q2, the declines in industrial output and in exports slowed in June, and the construction sector expanded, GKI noted. The drop in retail sales also slowed although part of the slowdown could be the effect of advance purchases before a VAT rise effective July 1. GKI sees the general government deficit narrowing to 3.8% of GDP in 2009, under the government target. It projects consumer price inflation will slow to 6.5% by year-end and puts average annual inflation at 4.7%. CPI will fall sharply in the second half of 2010 as the effect of VAT and excise tax rises enters the base period. GKI expects the central bank base rate to fall to around 7% from 8% by the end of the year. It puts the average forint/euro exchange rate at 270 in the second half and at 280 for the full year.

(Source: Hungary Around the Clock, 09/01/2009, pg. 1.)

VAT increase affects retail figures

Retail trade volume increased 0.5% from May to June, largely due to stockpiling and purchases ahead of the July increase in VAT from 20% to 25%, the Central Statistics Office reports.

Retail trade was down 2.2% year-on-year by volume in June and 3.2% lower in the first half. Retail turnover saw declines of 4.2% in May and 4.0% in April.

Retail trade volume (%):

	H-1	May-June
Total	-3.2	-0.5
Food	-2.6	0.6
Non-food	-5.6	2.9
Fuel	0.9	0.7

(Source: Napi Gazdaság 08/26/2009, pg. 2.)

May trade surplus at €480 mln

Hungary had a foreign trade surplus of €480 million in May and a surplus of €1.528 billion trade surplus in January-May, the Central Statistical Office (KSH) said in a second reading. The figures are level with preliminary data published on July 9. Both in euro and volume terms, exports and imports fell at a slower rate than they did in April. The trade surpluses compare to a €30 million deficit in May 2008 and a surplus of €301 million in January-May 2008.

In May 2009, exports fell 24.1% in euro terms and 16.9% in volume terms, dropping less than the 29.4% and 22.9% respective declines in April. Imports slipped 32.3% in euro terms and 25.6% in volume terms in May after respective declines of 35.4% and 29.6% in April. January-May exports fell 26.5% in euro terms and were down 21.1% in volume terms from a year earlier. Five-month imports were down 30.7% in euro terms and fell 25.9% in volume.

Terms of trade stayed practically unchanged in January-May as forint-term import prices rose 6.7% and export prices rose 6.4% in the period. In foreign currency terms, the price level of foreign trade fell close to 9% in the first five months from a year earlier, KSH reported. The forint weakened 17% yr/yr against the main currencies of Hungary's trade in January-May, including a 14% weakening against the euro and a more than 30% drop against the US dollar.

(Source: Hungary A.M., 07/31/2009, pg. 1.)

Budapest among top 10 conference venues

Budapest, June 16 (MTI) - Budapest has jumped to eighth place on the list of the most attractive conference venues, from the 24th place a year earlier, according to the Union of International Associations (UIA), the Hungarian Tourism Co. said on Tuesday.

Altogether 141 conferences were held in the Hungarian capital in 2008.
The list is headed by Singapore, Paris and Brussels, and from the European cities Vienna, Barcelona, Geneva and London are also among the top 10, Hungarian Tourism said.

(Source: MTI News, 06/16/2009, pg. 1.)

Hungary Still a Favourite for FDI

Hungary moved up from seventh to fifth in Europe in terms of the number of jobs created by foreign direct investment (FDI) last year, according to a survey by consulting group Ernst & Young.

Over 11,659 jobs were created in Hungary in 2008 as a result of FDI, only a few hundred less than in third-place France and fourth-place Russia. The most new jobs, over 20,000, were added in the UK.

FDI in Central and Eastern Europe fell by 5% and created 26,491 fewer jobs in the region than in 2007, compared with a decline of only 1,727 in Western Europe. In terms of the number of FDI projects, Hungary was ranked 12th with 108.

The numbers show Hungary attracted larger-scale investments, Napi Gazdaság (Daily Economics) observes, adding, however, that this will soon change in the current economic climate.

ITD Hungary CEO György Rétfalvi expects Hungary to profit from the crisis, as investors will turn to Central Europe. A more transparent and stable economic policy is required, he added.

(Source: Hungary Around the Clock, 06/05/2009, pg. 5.)