Hungary: Economy roars ahead in Q2, again beating market expectations
According to a preliminary reading, economic activity continued to recover in the second quarter of 2021, beating market expectations. GDP expanded 2.7% on a seasonally-adjusted quarter-on-quarter basis in Q2, following Q1’s 2.0% increase. On an annual basis, the economy grew a massive 17.9% in Q2, contrasting the minus 2.1% reading in Q1.
While a detailed breakdown is yet to be released, the press release highlighted that activity in the industrial sector was the main driver of the quarter-on-quarter expansion. Improved consumer spending and an expansionary fiscal stance likely also provided support.
More detailed GDP data will be released on 1 September.
Looking at H2, growth momentum will likely ebb somewhat but should stay robust nonetheless, aided by the strong vaccine rollout, expansionary fiscal policy and inflows of EU funds. The strong performance should also encourage the Central Bank of Hungary to continue tightening its monetary policy, being one of the first European central banks to have done so already this year.