Hungarian workers suffer as car crunch closes in

Tue Nov 11, 2008 10:50am EST
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By Balazs Koranyi

DUNAKILITI, Hungary (Reuters) - Hungarian auto worker Ferenc Sagi has read about the world financial crisis in the papers but did not think it would have much impact on his life in this sleepy town near the Austrian border.

Now there is little else he can think about.

The global meltdown has already cost Sagi his job, and will now drag Hungary into its first recession since the early 1990s and put tens of thousands of Central Europeans out of work.

"I had watched the news about the economy but never thought it would hit us so quickly," Sagi told Reuters.

"But in a way, it's understandable... In times of trouble, this sector will be hit first."

U.S. auto sales dropped by a third in October to their lowest level in a quarter-century and European sales are off sharply, plunging 40 percent in Spain and 19 percent in Italy as recession hits both sides of the Atlantic.

Investment in cheap production in the EU's eastern wing has made the car industry a bellwether for the economy and recession is bad news for Hungary, which turned to the International Monetary Fund last month to stave off a financial default.

The IMF has helped restore some confidence and relatively cheap labor has continued to draw foreign investment this year. But the economy is only beginning to feel the pain, and the car industry is the canary in the coalmine.   Continued...