Hungary GDP


Economy expands at fastest pace in nearly five years

In the first quarter, GDP expanded 2.5% over the same period last year according to revised figures released on 9 June. The print was broadly in line with the flash estimate released on 13 May (+2.4% year-on-year) and represents the fastest pace of expansion in nearly five years. As in previous quarters, growth was underpinned by a robust external sector, as manufacturing exports have been overhauled by strong economic activity in Western Europe. Nonetheless, the acceleration recorded in the first quarter was mainly due to developments on the domestic front. Total consumption stepped up from a 1.9% contraction in Q4 to decline just 0.2%, which was entirely due to a rebound in public sector spending (Q4 2010: -7.6% year-on-year; Q1 2011: +3.8% yoy), while private consumption tallied a 0.8% contraction (Q4 2010: -0.8% yoy). Fixed investment also improved, stepping up from a 9.1% contraction in the fourth quarter to a 1.6% decline which, despite remaining in negative territory, represents the most positive reading since the last quarter of 2008. In addition, the change in inventories also contributed to the stronger monthly reading. On the external front, exports accelerated from an 11.7% year-on-year increase to a 14.4% expansion. However, buttressed by the incipient recovery in the domestic sector, imports accelerated more markedly, rising from a 10.3% increase in the fourth quarter to a 14.4% expansion. As a result, the net contribution from the external sector to overall growth fell from 2.7 percentage points in the fourth quarter to 2.2 percentage points. A quarter-on-quarter analysis corroborates the improvement suggested by the annual data as economic activity increased 0.7% over the previous quarter in seasonally and calendar adjusted terms (Q4 2010: +0.5% quarter-on-quarter)


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