Hungary: GDP growth revised down a notch
March 11, 2011
In the final quarter of 2010, GDP grew 1.9% over the same period the year before. The reading was revised down a notch from the flash estimate released on 15 February but still exceeded the previous quarter's 1.7% increase. The acceleration over the previous quarter mainly reflected a slower depletion of inventories, which contributed 4.2 percentage points to overall growth. That said, apart of inventories, developments in the domestic sector were mostly negative. Total consumption contracted 1.9%, which contrasted the third quarter's 1.3% expansion, amid a decline in both public spending (Q3: +1.7% yoy; Q4: -7.6% yoy) and private consumption (Q3: +1.2% yoy; Q4: -0.8% yoy). In addition, fixed investment contracted 9.1% (Q3: +2.6% yoy). Meanwhile, the external sector continued to support growth driven by the sustained recovery in Western Europe, especially Germany, which is Hungary's most important trading partner. Exports increased 11.7% year-on-year, slightly below the third quarter's 13.9% expansion. However, import growth decelerated more markedly, from 13.0% in the third quarter to 10.3% in the fourth. As a result, the net contribution from the external sector to overall growth improved from 2.4 percentage points in the third quarter to 2.6 percentage points. A quarter-on-quarter analysis corroborates the moderate improvement suggested by the annual data as economic activity increased 0.2% over the previous quarter in seasonally and calendar adjusted terms. In the full year 2010 the economy expanded 1.2%, following on a 6.7% contraction in 2009. Currently, the Central Bank expects the economy to grow 3.1% for this year.