Hungary: Recession deepens in the last quarter of 2012
March 8, 2013
In the fourth quarter, GDP contracted 2.7% over the same period the year before, according to detailed data released by the Central Statistics Office (KSH) on 8 March. The figure, which matched the preliminary estimate published on 14 February, exceeded the 1.7% contraction recorded in the third quarter and represented the fourth consecutive drop in output as recession deepens. For the full year 2012, GDP contracted 1.7%, which contrasted the 1.6% expansion recorded in 2011.
Domestic demand remains depressed, mostly reflecting a further deterioration in fixed investment, which plunged 5.6% in the fourth quarter (Q3 2012: -1.7% year-on-year). Meanwhile private consumption fell 1.4% in the fourth quarter (Q3: -4.1% yoy), whereas government consumption swung to a 1.7% expansion (Q3: -0.1% yoy).
On the external side, exports swung from a 2.4% increase in the third quarter to a 1.1% contraction in the fourth, while, imports contracted 1.0% (Q3: -0.3% yoy). As a result, the net contribution from the external sector to overall growth switched from a 2.8 percentage-point contribution in Q3 to a 0.1 percentage-point detraction in the fourth.
On a quarter-on-quarter basis, GDP decreased a seasonally adjusted 0.9%, which marked a deterioration over the 0.4% drop recorded in Q3.
The Central Bank expects the economy to expand 0.5% this year, below the government's 0.9% growth forecast. For 2014, the Bank expects the economy to expand 1.5%. FocusEconomics Consensus Forecast panellists see zero economic growth this year, which is down 0.1 percentage points from last month's projection. For next year, the panel expects growth to accelerate to 1.4%.