Hungarian Parliament building

Hungary GDP Q3 2023

Hungary: GDP records best reading since Q4 2022 in the third quarter

According to a preliminary estimate, GDP dropped at a milder rate of 0.4% year on year in the third quarter, above the 2.4% contraction tallied in the second quarter. Q3’s reading marked the smallest drop since Q4 2022. On a seasonally adjusted quarter-on-quarter basis, GDP expanded 0.9% in Q3, up from the previous quarter’s flat reading. Q3’s reading marked the best result since Q2 2022. A complete breakdown will be released on 1 December.

According to the press release, the year-on-year contraction came on the back of falling output in the industry and services sectors only partially offset by rising agricultural production.

The economy should bounce back next year. Declining inflation and interest rates, together with real wage growth, will translate into rebounds in household spending and investment. The industrial sector will also return to growth amid stronger external and domestic demand. A potential agreement with the EU on the disbursement of funds poses an upside risk.

Commenting on the outlook, ING’s Peter Virovacz and Dávid Szonyi stated:

“As we see a significant quarterly GDP growth in the fourth quarter, the (statistical) carry-over effect will be positive in 2024. This means that a positive year-end could already lay the foundations for economic growth next year. In addition, consumption change could slowly turn positive in the coming quarters, in line with the gradual but slow recovery in consumer confidence and the parallel positive real wage growth. In addition, in a declining interest rate environment credit activity could also start to recover.”

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