Hungary: Economic growth moderates in Q3
November 17, 2021
According to a preliminary reading, economic activity continued to recover in the third quarter, albeit at a slower rate. GDP expanded 0.7% on a seasonally-adjusted quarter-on-quarter basis in Q3, following Q2’s 2.0% increase. On an annual basis, the pace of expansion eased from 17.8% in Q2 to 6.1% in Q3, amid a less favorable base effect.
While a detailed breakdown is not yet available, the press release highlighted that activity in the market services sector was the main driver of the quarter-on-quarter expansion.
More detailed GDP data will be released on 1 December.
Commenting on the short-term outlook, Peter Virovacz, senior Hungary economist at ING, stated:
“This 0.7% qoq third-quarter performance and developments in the fourth quarter are a warning to be more cautious on the GDP outlook. Based on the first three quarters of 2021, GDP rose by 7.1% yoy. Given the shutdowns in industry and their negative impact on export activity, and considering the fourth wave of Covid-19, the fourth quarter economic performance could be somewhat weaker than we previously forecast. At the same time, we also know that the government has mobilised significant fiscal resources for the last quarter of this year and the first quarter of next year to boost GDP growth. This may be able to partially offset the negative effects, although this stimulus to aggregate demand may also have a significant impact on import growth. In all, we are downgrading our GDP forecast to 7.0% yoy and 5.0% yoy in 2021–2022, respectively.”