Hungary: Economy contracts at more pronounced pace in Q2
GDP contracted at a steeper pace of 2.4% year on year in the second quarter, following the 0.9% contraction logged in the first quarter. Q2’s reading marked the worst result since Q4 2020.
The downturn was driven by weakening private consumption, fixed investment and exports. Private consumption contracted 3.2% in Q2, marking the steepest decline since Q1 2021 (Q1: -2.8% yoy). Fixed investment contracted at a more pronounced rate of 15.6% in Q2 from the 6.0% decrease recorded in the prior quarter. Meanwhile, government consumption bounced back, growing 2.3% in Q2 (Q1: -4.6% yoy).
Exports of goods and services growth fell to an over two-year low of 0.2% in the second quarter (Q1: +6.6% yoy). In addition, imports of goods and services deteriorated, contracting 5.6% in Q2 (Q1: +1.9% yoy), marking the worst reading since Q2 2020.
On a seasonally adjusted quarter-on-quarter basis, economic activity contracted 0.3% in Q2, from the previous quarter’s 0.4% decrease. Q2’s reading marked the smallest drop since Q2 2022
Commenting on the outlook, Orsolya Nyeste, analyst at Erste, stated:
“After the disappointing 1H 2023 figures, the second half of this year should bring a slow rebound, as domestic consumption is set to somewhat improve in parallel with easing inflationary pressure. On the other hand, uncertainties surrounding the timing of global recovery and worsening growth outlook in the Eurozone affect negatively prospects of industrial exports.”