Hungary: GDP growth decelerates notably in Q2 on external sector slowdown
September 4, 2015
In Q2, GDP expanded 2.7% over the same period last year, according to more detailed data released by the Central Statistics Office (KSH) on 4 September. The print was in line with the flash estimate and marked a significant slowdown compared to Q1’s 3.5% expansion. In addition, Q2’s result represented the smallest expansion in almost two years.
The moderation in Q2 was mainly driven by a worse performance of the external sector, which more than offset strengthening domestic demand. Growth in total consumption increased from 1.4% in Q1 to 2.1% in Q2, as a result of a softer contraction in government consumption (Q1: -5.4% year-on-year; Q2: -0.9% yoy). Private consumption in Q2 expanded at Q1’s pace of 2.6%, which marked the fastest increase in nine years. Fixed investment recovered notably from Q1’s 6.7% contraction to a 5.2% expansion in Q2.
On the external side of the economy, exports growth slowed from Q1’s 10.1% to 7.5% in Q2, the smallest expansion in two years. Imports also slowed, but to a lesser extent, moderating from 7.4% growth in Q1 to 6.5% in Q2. As a result, the external sector’s net contribution to overall growth fell from 2.8 percentage points in Q1 to 1.0 percentage points in Q2.
On a quarter-on-quarter basis, GDP increased a seasonally-adjusted 0.5%, which was down from the 0.7% increase recorded in Q1.