Hungarian Parliament building

Hungary GDP Q4 2021

Hungary: Economic growth strengthens in Q4

According to a preliminary reading, the pace of growth in economic activity accelerated in the fourth quarter. GDP expanded 2.1% on a seasonally-adjusted quarter-on-quarter basis in Q4, following Q3’s 0.9% increase. On an annual basis, the pace of expansion also sped up to 7.2% in Q4, from 6.1% in Q3. In 2021 as a whole, GDP therefore expanded 7.1%, contrasting the 4.7% contraction recorded in 2020.

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 2 March.

Commenting on the short-term outlook, Peter Virovacz, senior Hungary economist at ING, stated:

“The combination of today’s surprisingly strong GDP data and the January inflation shock could encourage the National Bank of Hungary to continue its tightening cycle, perhaps even longer than previously expected. At present, the global supply problems do not seem to be resolving, while the Hungarian economy is showing an increasingly strong demand expansion, which will only be further heated by the government measures at the beginning of the year. Based on the latest data, we are getting closer to a scenario where both GDP growth and inflation could be above 6.0% on average this year. This could lead the central bank to set the terminal rate above 6.0% as well, instead of our latest base case of 5.5%.”

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