Hungary: GDP growth continues to slow in the third quarter
December 4, 2015
Hungary’s economy continued to lose momentum in the third quarter, according to more detailed data released by the Central Statistics Office (KSH) on 4 December. GDP growth slowed from 2.7% over the same period of the previous year in the second quarter to 2.4% in the third quarter, which marked the worst result since Q2 2013. However, the print was slightly above the 2.3% expansion reported in the flash estimate. Growth has lost steam since hitting a multi-year high in Q2 2014 and is expected to proceed on a more moderate path going forward.
Regarding the domestic economy, fixed investment swung from a 5.0% expansion in Q2 to a 1.5% contraction in Q3. Investment surged in 2014 thanks to EU development funds that, however, have slowed this year as the funding dries up. Spurring investment to avert a notable slowdown in 2016 is a key obstacle for policy makers going forward. Meanwhile, private consumption picked up to a 2.6% expansion, which marked the best result since Q1 2006 (Q2: +2.3% year-on-year). Continued gains in the labor market and higher real wages have supported household spending. In addition, government consumption expanded 4.4%, which was notably above Q2’s 0.7% rise.
On the external side of the economy, exports slowed from a 9.4% expansion in Q2 to a 7.6% increase in Q3 amid weak global demand. Imports also slowed from a 7.6% increase in Q2 to a 6.8% expansion in Q3. As a result, the external sector’s net contribution to overall growth fell from 1.7 percentage points in Q2 to 0.7 percentage points.
On a quarter-on-quarter basis, GDP increased a seasonally-adjusted 0.6%, which was slightly above the 0.5% increase recorded in Q2.