* Hungary output drops 11.8 pct m/m, analysts say may be blip
* Hungary growth in govt's focus, f'casts unchanged for now
* Slovakia output beats forecasts, Romania slightly lower
By Marton Dunai and Sandor Peto
BUDAPEST, Feb 7 (Reuters) - A sudden drop in export demand
hammered Hungarian industry in December, leading to an 11.8
percent drop in output on the month and a much smaller rise from
the same month a year earlier than analysts had forecast.
The drop in production in the emerging European Union nation
of 10 million contrasted starkly with its regional peers, where
output continued to surge despite a bigger-than-forecast fall in
orders in Germany, their biggest export market. []
Hungarian output rose just 8.5 percent versus a year
earlier, data showed on Tuesday, slowing from a 14.7 percent
rise in November and far undershooting analysts' median forecast
for a 17.1 percent rise.
The monthly drop-off in Hungary affected all industry
sectors and was largely due to a decline in demand for the
country's exports, a statistician from the central statistics
office KSH said.
Economists said Hungary's data was likely a one-off blip and
that they would not change their growth forecasts for now, but
it highlighted how the government's budget strategy depends on
optimistic growth forecasts.
"We were somewhat surprised, taking into account strong PMI
figures and the rest of the region doing well in manufacturing,"
Danske Bank analyst Lars Christensen said.
"We're not panicking over these numbers. I am inclined to
say this is a one-off. On the domestic side things are fragile
but exports have been good, so we have a hard time seeing why
this figure should be so low."
German industry output fell unexpectedly in December,
depressed by a weather-related plunge in construction activity,
the Economy Ministry said later on Tuesday. Output sank by 1.5
percent on the month in seasonally adjusted terms, while
economists surveyed by Reuters had been expecting a 0.3 percent
rise in output. []
The Hungarian forint <EURHUF=> was little changed against
the euro, as was the Polish zloty <EURPLN=> and the Romanian leu
<EURRON=>.
HUNGARY LAGS
Some analysts said the drop could potentially be attributed
to severe weather in Germany, which may have caused some
manufacturers there to close temporarily.
"December brought very harsh weather in Germany, as in many
other places in Europe, so I suspect some German companies
scaled back production, leading to a dropoff," said Dirk Wolfer,
spokesman for the German-Hungarian Chamber of Commerce.
But that did not explain the strong performance in some of
Hungary's neighbours. Slovak output rode a rise in car exports
to beat analyst forecasts, expanding 19.7 percent from the same
period a year earlier even though some other industry sectors
recorded somewhat slower growth than in the preceding month.
[]
That even outpaced strong data from the Czech Republic,
where output grew 12.7 percent on the year. Slovakia also
outperformed every other country in the region, with Polish
slipping 4.1 percent in December from the previous month and
Romania recording a dip of 0.2 percent. []
"We expect industrial output to maintain double-digit growth
in the first quarter," Eduard Hagara, senior analyst with ING
Bank in Bratislava said.
After prematurely ending a bailout deal with the EU and
International Monetary Fund, Hungarian Prime Minister Viktor
Orban has shunned austerity measures in favour of a pro-growth
strategy incorporating a raft of unconventional budget measures.
Aside from seizing some $14 billion in private pension
assets and taxing banks, utilities and other mainly foreign
firms to cover public spending and cut debt, the plan depends on
growth forecasts of 3 percent this year, accelerating to 5.5
percent by 2015, which analysts say may be over-optimistic.
And although economists refused to draw wider conclusions
from the December industry data or use it as a reason to change
their growth forecasts, they said that any longer-term slowdown
would raise risks to Orban's budget plans.
"It does serve to highlight the fragility of this kind of
pro-growth strategy," said Neil Shearing, an economist at
London-based Capital Economics.
"At the moment, everything has been driven by industry and
manufacturing, and any signs that that is starting to lose steam
would be a real worry because there is no real evidence yet of
the consumer sector starting to pick up."
(Reporting by Marton Dunai and Sandor Peto; Editing by Hugh
Lawson)
