Hungary: Second quarter slowdown confirmed
September 8, 2011
In the second quarter, GDP grew 1.5% over the same period last year according to revised figures released on 8 September. The figure was unchanged from the flash estimate published on 9 June and represented the slowest pace of expansion in a year, well below the 2.5% increase observed in the first quarter. The slowdown was the result of a weaker domestic sector. In particular, fixed investment contracted 8.1%, which came in well below the 1.6% decline observed in the previous quarter. On a positive note, total consumption improved from a 0.2% contraction in the first quarter to a 0.1% increase, which was the result of stronger private consumption (Q1: -0.8% year-on-year; Q2: +0.1% yoy) being somewhat offset by a moderation in government spending (Q1: +3.8% yoy; Q2: +0.1% yoy). Exports slowed from a 14.4% expansion in the first quarter to an 8.8% increase, while imports decelerated more markedly, also from a 14.4% increase in the previous quarter to a 6.1% expansion. As a result, the net contribution from the external sector to overall growth improved from 1.2 percentage points in the first quarter to 2.8 percentage points in the second quarter. At the sector level, growth continued to be supported by the industrial sector, which slowed from a 10.6% expansion in the first quarter to a 5.6% increase. Agriculture picked up from a 2.9% increase in the first quarter to a robust 24.0% expansion, while services deteriorated by contracting 0.3% (Q1: +0.2% yoy). A quarter-on-quarter analysis corroborates the deceleration suggested by the annual figures as economic activity was flat over the previous quarter in seasonally and calendar-adjusted terms (Q1: +0.3% quarter-on-quarter) In its latest inflation report from June, the Central Bank projects the economy to grow 2.6% in 2011 and 2.7% in 2012.