Hungary: GDP growth slows in the second quarter
GDP growth moderated to 6.5% year on year (yoy) in the second quarter, from 8.2% in the first quarter.
Private consumption increased 10.9% in the second quarter, which was below the first quarter’s 14.1% expansion but still marked a notable increase, supported by strong wage growth and accumulated savings. Government consumption growth was the slowest since Q4 2021, expanding 0.3% (Q1: +6.4% yoy). Meanwhile, fixed investment growth moderated to 6.1% in Q2, from 13.2% in the prior quarter amid heightened uncertainty surrounding the economic outlook.
On the external front, exports of goods and services growth picked up to 7.6% yoy in the second quarter (Q1: +5.2% yoy), sustained by a resilient industrial sector, which marked the best reading since Q2 2021. Conversely, imports of goods and services growth slowed to 7.3% in Q2 (Q1: +8.3% yoy).
On a seasonally-adjusted quarter-on-quarter basis, economic growth moderated to 1.0% in Q2, compared to the previous quarter’s 2.1% increase. Q2’s reading marked the worst reading since Q2 2020.
Commenting on the outlook, János Nagy, analyst at Erste Bank, stated:
“Looking ahead, the near future is getting darker and darker. According to the high frequency data model of the central bank, in the first half of Q3 the estimated growth of the economy was only 0.4%. That is much lower than the consensus or our previous expectation. Agriculture could face a massive downturn in Q3 as a result of the experienced drought. Industry is a dark horse: electricity consumption shows significant moderation in July-August, but the PMI is still above the clouds. Number of passengers shows strong figures for July. Retail is expected to slow down considerably because of the emerging inflation and the partial phase out of regulated utility prices. September can be a crucial period: the majority of companies faces at outgoing energy prices which seriously jeopardize the operation. It has become likely that the economy will be in technical recession in H2 already and negative y/y figure could come in Q4.”