Hungary and the Czech Republic are still in recession, while Slovakia and Romania barely avoided a fall in their GDP, fourth-quarter flash estimate growth figures revealed on Thursday.
In Hungary, the economy shrank 0.9% quarter-on-quarter, much worse than the expected 0.3% fall, and 2.7% year-on-year, compared with market expectations of -1.9%.
“Importantly, the data also confirm a not only prolonged but also worsening underlying growth picture,” Peter Attard Montalto, fixed income strategist at Nomura, said in a market note.
“While we await the breakdown, we think that the deterioration in investments is probably the key cause, together with a much greater slowdown in real exports performance – hidden in nominal terms due to positive terms-of-trade effects,” he added.
Neil Shearing, chief emerging markets economist at Capital Economics, points out that, within the European Union, it looks like only Portugal and Greece suffered a greater year-on-year fall in output.
In the Czech Republic, the economy fell by 0.2% quarter-on-quarter, compared with market expectations of a 0.3% fall, and by 1.7% year-on-year, in line with forecasts but worse than the central bank’s expectations of a 1.4% fall.
“We do know from the statistics office that consumption and investments were a particular drag on growth,” Montalto said.
Manufacturing performed much better than in previous quarters, and this signals “some green shoots on the horizon, perhaps driven by a turnaround in sentiment on the eurozone,” he added.
WEAK DOMESTIC DEMAND
Slovakia’s economy expanded by 0.2% quarter in quarter, but it slowed to a 3-year low of 0.7%, compared with forecasts of 1%.
Romania narrowly avoided a “triple-dip” recession as its GDP grew 0.2% quarter-on-quarter in the last quarter of 2012, and 0.3% year-on-year. UniCredit economist Dan Bucsa noted that stronger exports outside the European Union, growing 2.5% year-on-year in 2012 against a fall of 1.8% for intra-EU exports, helped Romania’s GDP.
“On the back of more resilient exports, industrial production took a milder hit compared to more open CEE economies, contracting just 0.6% quarter-on-quarter in the fourth quarter of 2012,” he said.
But domestic demand remained weak, with construction falling by 1.2% quarter-on-quarter and retail sales by 2.1%.
Capital Economics’ Shearing said that on the basis of the data published on Thursday and taking into account earlier data from Russia and Poland “it seems that GDP growth in emerging Europe slowed to just 0.8% quarter-on-quarter in the fourth quarter – its slowest pace since the end of 2009.”
Analysts expect an improvement in the eurozone to help growth in emerging Europe pick up later in the year.
But the eurozone’s GDP posted a bigger than expected fall in the fourth quarter. The single currency’s economy shrank by 0.6% compared with a forecast of a 0.4% fall.
The eurozone’s economy contracted by 0.5% in the whole of last year, after growing by 1.5% in 2011.
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