Key events in EMEA and Latam next week

For the next week, Hungarian budgetary and trade developments will show how Covid-19 has transformed internal and external balances.

The budget might be helped by EU fund transfers, while the lockdown will provide a major negative impact on trade. We see year-on-year inflation dropping further in May on the back of base effects. The single most important factor behind the monthly price increase will be food prices due to supply shocks (weather and coronavirus-related), while a minor fuel price increase in the month will be counterbalanced by other core product groups like durables.

Albeit exciting from a macro point of view, we don't see this reading as a market mover or being an immediate game-changer for monetary policy.

With the main carmakers being shut down for almost the entirety of April, the number of cars produced declined by 89% YoY.

As such, strong fall of April industrial production is likely, though particular figure might be difficult to estimate and we expect a contraction of around 25%. May CPI will be affected by the reduction in VAT, which is applicable for some services since May. Together with a high base, we should see a deceleration in YoY price growth towards 2.5%.

The unemployment rate was rescheduled for earlier release on Friday the 5th instead of Monday and we expect just a minor increase to 3.6%.