Hungary: Growth gains traction in Q3
A second GDP release published by Hungary’s Statistical Office on 29 November confirmed that growth, in annual terms, accelerated to 5.0% in the third quarter from 4.9% in Q2, and thus remains among the fastest growing economies in the Eurozone.
A detailed breakdown by components revealed that government spending rose 2.2% in the third quarter, rebounding markedly from Q2’s revised 3.7% contraction (previously reported: +1.7% year-on-year). Private consumption, however, lost steam in Q3, expanding at a softer pace of 4.2% year-on-year (Q2: +4.7% yoy), as consumer confidence remained downbeat. Moreover, fixed investment growth slowed from the previous quarter to 16.1% (Q2: +17.8% yoy), amid a deterioration in business sentiment.
On the external front, export growth jumped to 8.3% in the third quarter from an upwardly revised 2.8% in Q2, seemingly defying external headwinds. Import growth also picked up pace in the period, but to a lesser extent (Q3: +7.4% yoy; Q2: +4.3% yoy). Taken together, the external sector contributed 0.9 percentage points to growth in the third quarter, contrasting a deduction of 1.5 percentage points in the previous quarter.
Looking ahead, economic activity is seen easing next year, as fixed investment loses strength on reduced absorption of EU funds and slower job creation weighs on private consumption. Meanwhile, subdued growth in key trading partners, trade war uncertainties and a hard Brexit pose the main downside risks to the outlook.