Epsilon Capital Management’s First Quarter European (Emerging) Economic Round Up  ビジネス

This is Epsilon Capital Management’s 2 Part Series on the Emerging European Economies for the first quarter of 2012.
In the first part of our report we looked at the Russia, Turkey and Poland the 3 largest Emerging Economies within Europe, now we turn to Hungary and the Czech Republic to round off the remaining economies of interest.
Hungary: Managing to keep its head above water
The impact of the Euro-zone crisis on the Eastern European nations depended on the extent of their reliance on Germany and their domestic fiscal cuts, going by the fourth-quarter GDP figures.
Thus, even though Hungary is not doing well overall, its economy posted a 1.4% year-on-year growth in the fourth quarter of 2011. However, the European Commission forecasted recessionary conditions in Hungary this year as its major trade partner Germany is expanding only at a slower rate.
Meanwhile, the deputy governor of the Hungarian central bank Ferenc Karvalits said he does not foresee any cut in the base interest rate until there is an improvement in risk perceptions. In a WSJ interview, Karvalits said a monetary agreement with the European Union and the International Monetary Fund could go a long way to bring down Hungary’s vulnerability by providing a safety net.
However, the OECD does not seem to be impressed by Hungary’s modest fourth-quarter GDP numbers. Close on the heels of the European Union’s suspension of some infrastructure subsidies, the international agency urged the country to take “swift action” to stabilize its economy and to stimulate growth, according to a report in the Financial Times. On another note, the European Commission said it is concerned about the independence of Hungary’s central bank and said the action taken by the Viktor Orban administration will have a bearing on whether to give the country access to an emergency credit line.
Czech Republic: Economy slips into recession
In a sign that the Euro-zone crisis is catching up with the export-oriented Czech Republic, the economy became the first in central and Eastern Europe to slip into recession, as it recorded a 0.3% contraction in GDP during the fourth quarter of 2011. The economy was at the receiving end mainly because of its reliance on Germany, which purchases 18% of the country’s manufacturing exports.
The Czech economy posted successive contractions during the third quarter and the fourth quarter, pushing it into a recession. The European Commission also forecasted that the Czech economy is not expected to grow during the year 2012.
Despite the slip into recession, manufacturing output recorded its fastest growth in six months in March, thanks to new domestic orders coming in. The HSBC Czech Republic Manufacturing PMI increased to 52.1 from 50.5 in February, according to a Bloomberg report.

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