Hungary: Economic growth picks up pace in Q3
Economic growth accelerated to 5.0% year-on-year in the third quarter, up from Q2’s 4.9% expansion, according to a preliminary reading released by the Hungarian Central Statistical Office (KSH) on 14 November. Meanwhile, in quarter-on-quarter, seasonally- and calendar-adjusted terms, growth was stable at 1.1%.
Both the industrial and construction sectors were among the main contributors to the third quarter’s expansion. While a detailed breakdown of the result has yet to be released, available data suggests that the economy seemed to have somewhat defied external headwinds: Manufacturing activity rose at a faster clip in Q3 than in the previous quarter, while merchandise exports accelerated markedly in the same period. Meanwhile, retail sales growth accelerated in Q3 amid improved consumer sentiment, suggesting that household consumption quickened in the quarter.
Looking ahead, Dan Bucsa, chief CEE economist at UniCredit, stated:
“Despite having the most resilient exporting sector in CEE, Hungary is still facing several shocks to growth in 2020: a fall in building works due to changes in VAT, smaller new-production capacities in industry, poor demand from the eurozone and a smaller fiscal impulse. Despite a strong reliance on export and negative base effects in construction and industry, we expect the Hungarian economy to grow close to, but below 3% in 2020”.
Growth is seen easing next year, as fixed investment loses strength on reduced absorption of EU funds and slower job creation weigh on private consumption. Meanwhile, persistent external headwinds are seen hampering exports.
More detailed data will be released on 29 November.