The European Commission has launched an investigation into subsidies Hungary gave to Ibiden Hungary Gyártó, the Hungarian arm of Japan’s Ibiden, Gazdasági Rádió reported last week. The government gave the company a EUR 39 million subsidy for its plant manufacturing filters for car exhausts. The Commission said that the decision could have given the company an unfair advantage, thus breaching EU regulations. The HUF 25 billion (EUR 101.8 million) plant in Dunavarsány opened in July 2005.
Auto component manufacturer Modine is no longer going to set up a plant in Füzesabony, northeast Hungary, the mayor of the town Éva Antal Lami said. The plant was supposed to create 400 jobs, but Modine said that the ground in the area was not good enough.
The number of insolvencies, liquidations and closures grew by 29% year-on-year to 9,400 in the first half of 2007, the head of credit consultancy Coface Hungary said last week. The construction industry and the trade sector were the most vulnerable.
Headline inflation ticked up to 8.6% yr-on-yr in June, the Central Statistical Office said last Wednesday. The slight increase from 8.5% yr-on-yr in May came as a surprise to analysts, who were once again predicting 8.5%. Core inflation – which strips away volatile fuel and food prices – also climbed, coming in at 5.9% compared to 5.7% in May. Inflation began to climb last year after the government introduced a series of measures aimed at cutting the enormous budget deficit, which at 9.2% in 2006 was by far the largest in the EU. Headline inflation peaked at 9% in March and then began what analysts believed would be a steady downward slide. The National Bank of Hungary (MNB) also viewed this as a positive trend, last month cutting the base interest rate by 25 basis points to 7.75%. Analysts, however, said the surprise rise gave no cause for concern. “While interest rates are expected to remain unchanged in July, the longer term story will see inflation fall rapidly during the second half of the year, which in turn will pave the way to significantly lower interest rates,” said Nigel Rendell from Calyon Bank in London. The MNB is targeting around 5% inflation by the end of the year.
A German rail workers strike caused problems for some Hungarian car factories last week, with finished cars having to be stored locally, the daily Népszabadság reported.
The demand for home loans in the first five months of this year was HUF 10 billion (EUR 40.7 million) lower than last year’s figure of HUF 209 billion (EUR 850.5 million), research firm DEM said last week.
Hungarians have increasingly turned to domestically produced products over the last few years boosting the domestic market, the business daily Világgazdaság said last Wednesday. A regional survey by research firm TGI found that 23% of Hungarians said they would definitely opt for domestic goods, while another 20% said they agreed with the principle. Only Poles were more partisan.
Pensions will go up by 2% this year, Prime Minister Ferenc Gyurcsány told a pensioners’ forum last Wednesday.
Five people had to be rescued from Lake Balaton last week after a violent storm with winds up to 100km/h broke out.
Hungary continued its recent spate of bizarre record attempts last Friday night as members of Budapest Transport Company’s (BKV) sports club were set to run through forty Combino trams lined nose to tail along the 4-6 tram line from Jászai Mari tér to Dob utca. The attempt at creating the longest tram run-through follows on from a previous attempt to have the most people in plaster casts swim in Lake Balaton.