Hungary: Slower growth confirmed in the third quarter
December 9, 2011
In the third quarter, GDP increased 1.4% over the same period last year according to data published by the Central Statistics Office (KSH) on 9 December. The reading was unrevised from the flash estimate released on 15 November and came in a notch below the 1.5% expansion observed in the second quarter. Gross fixed investment contracted for the eleventh consecutive quarter and dropped 8.6% (Q2: -7.6% year-on-year). Moreover, total consumption contracted 0.2% over the same period last year, which came on top of a 0.3% decline in the previous quarter. Falling government spending was the main drag on consumption (Q2: -0.8% yoy; Q3: -1.4% yoy), whereas private consumption improved a notch to a flat reading (Q2: -0.2% yoy). Exports continued to underpin the recovery by growing 7.6% (Q2: +8.8% yoy), amid sustained third quarter growth in Western Europe and helped by the recent depreciation of the forint. Imports, on the other hand, moderated more markedly from a 5.9% expansion in the second quarter to a 3.3% increase in the third quarter. As a result, the external sector's net contribution to overall growth improved further to plus 3.9 percentage points. At the sector level, growth was underpinned by agriculture and industry. Output in the agricultural sector soared 28.5% (Q2: +26.6% yoy), while that of industry increased 3.5% (Q2: +6.3% yoy). In contrast, the services sector contracted for the twelfth straight quarter, dropping 0.9% (Q2: -0.7% yoy). Compared to the previous quarter, GDP increased a seasonally adjusted 0.5%, which came in above the 0.2% increase recorded in the second quarter. The Central Bank projects the economy to grow 1.6% this year and 1.5% next year.