Hungarian retail sales snap 41-month decline in July as economy recovers
Hungarian retail sales rose in July, ending a 41-month decline, as the economy recovered from its worst recession in 18 years.
Sales advanced 1.7 percent from a year earlier after a 4.6 percent drop in June, the Budapest-based statistics office said today in an e-mailed statement. It was the first increase since January 2007, according to data compiled by Bloomberg. The median estimate of four economists in a Bloomberg survey was for a 3 percent decline. Sales rose 1 percent on the month.
Domestic demand starting to come around is a welcome sign, said Gergely Suppan, an economist at Takarekbank Zrt. in Budapest. There may even be more dynamic economic growth in the second half than we previously expected.
Retail sales started dropping in 2007, when budget cuts to narrow a record deficit left consumers with less money to spend. The decline continued as Hungary suffered its worst recession since 1991, which ended in the fourth quarter.
The forint traded at 278.77 per euro at 10 a.m. in Budapest from 280.38 late yesterday, its strongest since Aug. 19.
The July increase in retail sales was in part the result of base effect from the trough of the recession, Suppan said. The forint s weakness against the Swiss franc may still limit the spending power of Hungarians who took out mortgages and car loans in the Alpine currency, he said.
The forint has fallen 15 percent against the franc in the past 12 months, the biggest drop among European currencies tracked by Bloomberg.
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