March 4, 2020 / 10:30 AM / a month ago

UPDATE 1-Hungarian industry faces component shortages due to coronavirus

* Even before coronavirus, Hungary faced a slowdown

* Survey covered sectors ranging from cars to health

* Service sector sees need for action to support forint (Adds detail on survey results, quotes)

By Gergely Szakacs

BUDAPEST, March 4 (Reuters) - Hungarian companies face component shortages because of the coronavirus’s impact on supply chains, aggravating a slowdown that had already begun to bite, the head of the Confederation of Hungarian Employers and Industrialists said on Wednesday.

“Industrial companies are already facing a situation in which there is no supply of certain components,” Peter Futo told a news conference on an annual PriceWaterhouseCoopers survey on expectations of more than 200 business leaders.

He did not specify which components were running short, but said the coronavirus would have a big impact on the Hungarian economy.

The PwC survey, conducted between October and December, before the coronavirus engulfed the world economy, already forecast a slowdown, with 60% of chief executives polled expecting slower economic growth in Hungary this year.

“If we conducted the poll today, probably an even higher percentage would be projecting a slowdown,” Tamas Locsei, PwC’s Chief Executive in Hungary, said.

Economists polled by Reuters expect Hungary’s growth to slow to 3.5% this year from nearly 5% in 2019, in line with the government’s own forecast, which it lowered in February. PwC sees growth between 3 and 3.5%, Locsei said.

The survey said more than half of business leaders from sectors ranging from car manufacturing to health and energy forecast no increase in employment this year, while four out of five companies planned to boost their operating efficiency, including through the use of automation.

Business leaders flagged exchange rate volatility as one of their major problems, with associated business risk trumping concerns over regulation and employer taxes for the first time since the survey was launched.

“Chief executives are making bets on where the forint will be at the end of the year,” PwC’s Locsei said, adding that manufacturing companies were more relaxed about the forint’s weakening than service sector companies.

“For manufacturing companies, the weaker forint means somewhat cheaper employment costs and higher revenues in forint,” he said.

Service sector companies by contrast are beginning to agitate for action to halt the currency’s slide, he added.

The Hungarian forint has hit successive record lows versus the euro this year, pressured by the Hungarian central bank’s loose monetary policy. On Wednesday it traded at 335 per euro, its strongest level since late February. (Reporting by Gergely Szakacs; Editing by Jan Harvey and Barbara Lewis)

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