German Economic Decline Deeply Impacts Hungarian Manufacturing

The Hungarian manufacturing industry is facing one of its toughest years, struggling with technological transitions and Europe’s exclusion from world markets, reports Világgazdaság. The situation has been exacerbated by external demand challeng

By: hungarytoday.hu

Nov 06 2024
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German Economic Decline Deeply

The Hungarian manufacturing industry is facing one of its toughest years, struggling with technological transitions and Europe’s exclusion from world markets, reports Világgazdaság. The situation has been exacerbated by external demand challenges, particularly in Germany, Hungary’s largest export market.

As both Hungary and Germany grapple with economic challenges, Hungary’s manufacturing sector is suffering from reduced demand, especially for vehicle and battery production. According to an article we published, Germany’s economic decline has deeply impacted Hungarian suppliers. The shutdown of factories, such as those in the automotive sector, has resulted in supply chain disruptions that Hungary is struggling to overcome, especially as its economy depends heavily on exports.

The Hungarian manufacturing sector is facing significant struggles, particularly in the automotive industry, which has seen a 4.1% output decline in recent months.

The lack of new orders and the decline in external demand are creating a risk of stagnation, especially with the ongoing technological changes. The country must find new markets to avoid being stuck in a low-growth scenario.

Labor and capacity issues are another concern. Factories have seen reduced capacity utilization, running at only 70% in the first quarter of the year.

With companies like SK Innovation halting production due to poor demand, workers are facing reduced hours, creating an environment of unused capacity and non-working labor, which is compounding the economic problems.

The shift in technology, especially in vehicle manufacturing, is also taking a toll. As companies transition to new production lines, such as Mercedes Benz’s decision to reduce shifts, output cuts are affecting the overall economy. This further intensifies the challenges faced by Hungary’s manufacturing sector.

Looking ahead, the Hungarian economy’s recovery depends heavily on a potential recovery in Germany and the successful targeting of Eastern markets. However, these prospects come with significant uncertainty, and Hungary’s future economic recovery may take years. The road to recovery is long, but Hungary must act quickly to avoid prolonged stagnation.

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