Key events in EMEA and Latam next week

We expect industrial production to decelerate in May from 9.2% to 6.4% YoY, reflecting mainly a difference in the working days and the structure should present broad-based growth. We forecast that the value added in industry and consumption - in 2Q19 is likely to achieve a similar level as in the 1Q. Therefore, we expect 2Q GDP to be stronger than the 4.7% YoY, which was reported a quarter ago, despite adverse economic conditions in the external environment.

Labour market figures should present a stable, solid expansion. We expect wage to increase in May from 7.1% to 7.4% YoY. Corporate employment growth is likely to remain stable - close to 3% YoY. Overall sentiment remains solid: the number of companies reporting problems with labour shortage is still at a historically high level, which indicates no deterioration in the demand for labour. Similarly, the share of firms mulling over wage increases is relatively high, which suggests that wages should oscillate between 7% and 8% also in the second half of the year.

The only important data regarding Hungary is the current account balance in 1Q19. Based on the monthly data releases, we see the balance to turn into a surplus again after been in negative territory for the past couple of quarters. This is due to the rebound in export-related industrial production, thus trade balance was able to improve significantly.