*Czech industrial output up 2.2 pct in June vs 5.4 pct
forecast
*Slovakia's output rises 6.2 pct yr/yr in June, below a 7.0
percent forecast
*Hungarian June foreign trade surplus smaller than expected
By Sandor Peto
BUDAPEST, Aug 8 (Reuters) - Czech and Slovak industrial
output grew more slowly than expected and Hungary recorded a
disappointingly low trade surplus in June as weakening euro zone
demand took its toll on the three countries' exports.
A bunch of figures released in the new European Union
members on Friday indicated risks to economic growth in the
region where currencies surged to record highs last month.
The data came on the heels of a warning from the European
Central Bank President Jean-Claude Trichet on Thursday that he
expected euro zone growth to weaken substantially.
Czech industrial output rose by 2.2 percent in annual terms
in June, well below analyst forecasts of 5.4 percent, while
Slovakia's 6.2 percent growth was below a 7.0 percent forecast.
Hungary posted a 100 million euro trade surplus in June,
though analysts had expected a surplus of 146 million and its
June industrial output figures disappointed earlier this week
with a 0.3 percent annual fall.
"The whole... region is starting to print weaker growth and
worse trade numbers given easing external demand and surging
commodity prices," said Silja Sepping, analyst at Lehman
Brothers in London.
Analysts said strong currencies in the region added to
concerns over a worsening economic outlook in central Europe's
main export markets, increasing pressure on the region's central
banks to cut interest rates.
The Czech Republic also said on Friday that unemployment
picked up in July to 5.3 percent from 5.0 percent in June.
RATE CUTS ON THE CARDS
The Czech central bank was the first in the region to start
to reverse earlier rate hikes, cutting its key repo rate by a
surprise by 25 basis points to 3.5 percent on Thursday.
Central European currencies have retreated slightly from
record highs hit amid rate rise expectations last month, but
central bankers and economic policy makers have warned that the
currencies' strength are still damaging the economy.
One day after the first rate cut, the Czech Republic
reported a rise in annual inflation to 6.9 percent in July from
6.7 percent in June, but the inflation outlook remained benign.
"The (inflation) data gives room for a further interest rate
reduction," said David Marek, an analyst at Patria Finance.
Currencies in the region fell on Friday following the Czech
rate cut, weak economic data and comments by Polish central bank
Governor Slawomir Skrzypek who said the strong zloty threatened
the country's economic stability.
Slovakia will give up monetary policy independence next year
by entering the euro zone, and analysts said Hungary's central
bank was unlikely to rush into rate cuts in the next months due
to existing inflation risks.
New production capacities shield Slovakia from weaker demand
in western Europe, but in Hungary, a laggard in growth in the
region, concerns over the economy are continuing to put
political pressure on the Socialist minority government.
(Reporting by Sandor Peto; Editing by Gerrard Raven)
