Both the Czech and Hungarian economies slipped back to recession in 2012 with the last quarter of the last year being especially difficult. This is a message, which has been brought by local statistical offices this morning.
According to preliminary figures released by the CZSO, the Czech real GDP fell by 1.1% in 2012, while the economy declined by 1.7% in the last quarter. The main driver of these poor results was weak domestic demand mirrored by a decrease in household final consumption and fixed capital formation. In our view, this negative trend will not be reversed until export-oriented industry brings better times for the Czech economy.
Although Czech GDP figures may look discouraging, Hungarian data appear even worse. According to preliminary estimates, the Hungarian aggregate output decreased by 1.7% in 2012, which would imply a GDP drop by 0.9% q/q or 2.8% y/y in the fourth quarter of 2012. Contraction of the Hungarian economy has accelerated because of weaker external demand from the euro-zone (while the domestic demand has been falling continually).
As concerns market reaction to the above mentioned macro figures: the weakening koruna has stabilized after the GDP report, while the Hungarian forint has got under pressure.