Hungary: GDP growth slows in the third quarter
December 1, 2022
GDP growth moderated to 4.0% year on year (yoy) in the third quarter, from 6.5% in the second quarter. A considerable slowdown in domestic demand amid soaring inflation, higher interest rates and depressed consumer and business sentiment drove the deceleration.
Private consumption increased 4.1% in the third quarter, below the second quarter’s 9.8% expansion, as consumers felt the pinch of decreasing purchasing power and weak sentiment. Government consumption fell 0.5% (Q2: -0.2% yoy). Meanwhile, fixed investment growth moderated to 4.1% in Q3, from 6.2% in the prior quarter, amid heightened uncertainty surrounding the economic outlook.
On the external front, exports of goods and services growth accelerated to 14.1% yoy in the third quarter (Q2: +7.6% yoy), sustained by a resilient industrial sector. Meanwhile, imports of goods and services growth accelerated to 10.6% in Q3 (Q2: +7.0% yoy).
On a seasonally-adjusted quarter-on-quarter basis, the economy shrank 0.4% in Q3, swinging from the previous quarter’s 0.8% increase.
Commenting on the outlook, Peter Virovacz, senior economist at ING, stated:
“The detailed data, therefore, confirms our view that the domestic developments will translate into a technical recession in Hungary, as we see a continued drop in real GDP on a quarterly basis in the fourth quarter. [...] As for 2023, the picture is much gloomier. This year’s expected ugly end creates a negative carry-over effect for next year, and Hungary is probably facing another quarter of GDP contraction in the early stages of 2023.”