* Hungary grows 0.2 pct q/q, 2 pct y/y, beats forecasts
* Czech Republic below at +0.5 pct q/q, +2.9 pct y/y
* Romania shrinks less than expected on year, grows q/q
* Slovak growth in line with expectations
* Analysts note q/q growth slowed in many countries
(Adds Bulgarian figures)
By Michael Winfrey
PRAGUE, Feb 15 (Reuters) - Emerging Europe's industry-led
economic recovery slowed at the end of 2010 and weak consumer
demand compounded by budget consolidation in many countries
looked likely to keep a lid on growth this year.
The preliminary results from Hungary, the Czech Republic,
Slovakia, Romania and Bulgaria, bore some resemblance to data
from Germany, the region's largest export destination, where
foreign trade drove a 0.4 percent quarterly expansion that was
tempered by severe weather.
Analysts noted quarter-on-quarter growth figures had slowed
in the region's biggest economies, while budget-cutting
campaigns by governments and the absence of a consumer rebound
meant there was still some way to go to achieve consistent
annual growth above 3 percent.
Hungary, whose government has pursued a pro-growth strategy
based on raising budget income rather than cutting costs, showed
better than expected 2 percent growth versus a year earlier,
beating market forecasts of 1.7 percent growth. []
But the Czech Republic missed analysts' estimates on an
annual basis, growing just 2.9 percent. Its 0.5 percent
quarterly result also fell below the market's 0.8 percent
forecast.
Like Hungary and neighbouring Slovakia, the Czechs had shown
double digit spikes in manufacturing at the end of last year.
But the government is targeting 1.2 billion euros in budget
cuts, a plan the central bank has warned will squeeze growth.
"The export recovery is volatile. It's not a strong, one-way
recovery," said Raffaella Tenconi, an emerging Europe economist
at Bank of America Merrill Lynch. "And tighter fiscal spending
does not help, particularly in the Czech Republic and Romania."
Euro zone member Slovakia expanded 3.5 percent on the year,
slowing from a 3.8 percent rise the previous quarter.
Analysts said the data, which included lower-than-expected
Hungarian inflation numbers, indicated the region's central
banks would probably not be in a rush to tighten interest rates
despite concerns over high food and commodity prices.
The Hungarian forint <EURHUFE=D2> rose against the euro and
was trading up 0.37 percent from the previous day's close at
0949 GMT. The Polish zloty <EURPLNE=D2> was also up 0.3 percent,
but the Czech crown <EURCZKE=D2> and Romanian leu <EURRONE=D2>
were flat.
SLOWDOWN?
Romania grew 0.1 percent versus the third quarter and shrank
just 1.2 percent for the whole year, a large improvement over
the 7.1 percent contraction in 2009, when it agreed a 20 billion
euro bailout with the International Monetary Fund.
Lagging its neighbours due to an austerity programme of
salary cuts and tax hikes aimed at cutting the fiscal deficit,
the centrist coalition government expects to pull out of a
painful two-year recession in 2011, growing by up to 2 percent.
[]
Following a 4.7 percent contraction in 2009, neighbouring
Bulgaria accelerated to expand 1.7 percent in the last three
months of 2010 versus the previous quarter for full-year growth
of 0.3 percent, missing government forecasts of 0.7 percent.
Headwinds remain across the region, however, and the data
showed a distinct slowdown in the pace of growth in its biggest
export-led economies.
The Czech quarter-on-quarter growth in the last three months
of 2010 was slower than the third quarter's 1.0 percent
expansion. Hungary slowed to 0.2 percent, from 0.8 percent, and
Slovakia to 0.9 percent, from 1 percent.
Stronger growth will be necessary to push unemployment back
from around 10 percent in Hungary and the Czech Republic and
12.5 percent in Slovakia, a crucial ingredient to reviving
moribund domestic demand.
"Unless you are going to get sustained growth of around 3
percent, it's difficult to see a reasonable recovery in the
labour market," said Neil Shearing, an economist at Capital
Economics.
Other data showed Hungarian price growth <HUCPIY=ECI> slowed
dramatically to 4 percent in January from 4.7 percent in
December.
The headline figure was below the median forecast for 4.3
percent in a Reuters poll <HUCPIY1> and analysts expected that
to put a stop to a run of three interest rate rises in as many
months by the central bank.
"A rate hike next week has become unlikely after this, while
the longer-term inflation outlook still warrants some caution,"
said Gyorgy Barcza, an analyst at Budapest-based K&H Bank.
(Additional reporting by Jana Mlcochova in Prague and other
Reuters bureaus; editing by Patrick Graham)
