Hungary: Economy contracts for the fifth quarter in a row
June 6, 2013
In the first quarter, GDP contracted 0.9% over the same period last year, according to detailed data released by the Central Statistics Office (KSH) on 6 June. The figure, which matched the preliminary estimate published on 15 May, marked an improvement over the 2.7% contraction recorded in the fourth quarter. That said, the Q1 result represents the fifth consecutive quarterly decline in economic activity.
The improvement in Q1 was mainly due to a stronger external sector, whereas domestic demand remained depressed. Private consumption dropped 1.2% in the first quarter (Q4: -1.1% yoy), while government spending fell 2.6% (Q4: +0.9% yoy). In addition, fixed investment contracted 5.6%, which is broadly unchanged from the 5.7% drop seen in Q4.
On the external side of the economy, exports swung from a 1.1% drop in the fourth quarter to a 1.3% rise in the first, while imports rose 0.9% (Q4: -1.0% yoy). As a result, the net contribution from the external sector to overall growth swung to 0.4 percentage points in Q1 from minus 0.1 percentage points in Q4.
On a quarter-on-quarter basis, GDP increased a seasonally adjusted 0.7%, which marks an improvement over the 0.4% drop recorded in Q4.
The Central Bank expects the economy to expand 0.5% this year. For 2014, the Bank expects the economy to expand 1.5%. FocusEconomics Consensus Forecast panellists see no economic growth this year, which is down 0.1 percentage points from last month's projection. For next year, the panel expects growth to accelerate to 1.4%.