Hungary: Economic growth eases in Q4 2019
February 28, 2020
A second GDP release published by Hungary’s Statistical Office on 28 February confirmed that growth, in annual terms, softened to 4.5% in the fourth quarter of 2019 from 5.0% in Q3, marking the weakest reading in over two years. This brought full-year growth to 4.9%, which was down from the 5.1% rise in 2018.
A detailed breakdown by components revealed that fixed investment growth decelerated to 7.0% (Q3: +16.1% year-on-year) amid weakening business sentiment. Meanwhile, government spending picked up pace in Q4, rising 7.0% after Q3’s revised 4.0% expansion (previously reported: +2.2% year-on-year), while household spending growth accelerated to 4.8% from Q3’s revised 3.8% (previously reported: +4.2% yoy) against a backdrop of low unemployment and high wage growth.
On the external front, export growth slumped to 3.3% from an upwardly revised 10.2% in Q3 (previously reported: +8.3% yoy), weighed on by muted regional demand. Meanwhile, import growth also eased in the quarter, decelerating to 5.9% from Q3’s revised 10.2% (previously reported: +7.4% yoy).
The economy is seen losing pace this year, as fixed investment loses strength on reduced absorption of EU funds. Key downside risks to the outlook include uncertainties about global economic growth, particularly in light of the recent outbreak of the coronavirus, which could hamper output in the all-important car sector.
Author: Hanna Andersson, Economist