Hungary: Recovery remains on track amid stronger domestic demand
December 9, 2010
In the third quarter, gross domestic product (GDP) increased 1.7% over the same period last year. The figure was revised up a notch from the flash estimate released on 12 November and came in above the previous quarter's 1.0% expansion. However, the figure was boosted by a low base of comparison, as the economy had contracted 7.5% in the third quarter of 2009. The acceleration over the previous quarter was the result of developments in the domestic sector. Private consumption finally showed signs of recovering, as it swung from a 5.0% contraction in the second quarter to a 1.2% increase in the third quarter. In addition, government consumption stepped up to a 1.7% expansion (Q2: +1.4% year-on-year), while the contraction in fixed investment eased to a 2.6% drop (Q2: -4.5% yoy). In contrast, the net contribution from the external sector to overall growth fell from 3.4 percentage points in the second quarter to 2.4 percentage points in the third, as exports decelerated to a 13.9% expansion (Q2: +15.8% yoy), while import growth slowed only slightly to 13.0% (Q2: +14.4% yoy). A quarter-on-quarter analysis corroborates the improvement suggested by the annual data as economic activity increased 0.8% over the previous quarter in seasonally and calendar adjusted terms.