Hungarian automotive sector: New dawn or just mirage?
|On the radar
- Today, Poland will publish core inflation in the afternoon.
- Otherwise, there are no other releases scheduled.
Economic developments
Today we would like to come back and bring more attention to the Hungary’s Special Report published last week “Automotive sector: New dawn or just mirage?”. The report analyses the automotive sector in Hungary as it remains the largest sub-sector in Hungary’s manufacturing industry, accounting for 13.5% of all manufacturing jobs and employing over 104,000 people. Hungary has been attracting top EV players from the Far East to launch production, being a part of the government’s strategy - the so-called Eastern Opening. As a result, Hungary became one of the most important EV powerhouses in Europe. However, battery production has acted more as a substitute than a complement to traditional automotive, reinforcing Hungary’s dependence on German industry.
Market movements
The Czech koruna and the Polish zloty have strengthened against the euro more visibly over the last week. The EURHUF has been holding close to 384 ahead of the central bank meeting scheduled for this week. We do not expect any change in the key policy rate and expect hawkish tone. Hungarian Prime Minister Orban signed decree on raised windfall tax on lenders. In particular, banks must pay 10% of pre-tax profit for share under HUF20b (up from initial 8% plan), and 30% for share above HUF20b (up from 20% seen earlier). Hungary’s long-term yields increased last week due to adjustments in the budget plans for 2025 and 2026.
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