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Hungaryʼs GDP contracts for first time in four years

Telco

Hungaryʼs growth hit negative numbers for the first time in four years, shrinking 0.8% in the first quarter after growing 0.6% in the previous three months, according to preliminary figures released today by the Central Statistical Office. Economy Minister Mihály Varga blamed a reduction in available EU funds and lower output from the auto industry.

Volume change of GDP in Hungary compared to previous quarter, according to data adjusted for seasonal and calendar effects. (Central Statistical Office)

Hungary spent a great deal of its available European Union funding last year, and this spending helped spur growth. The countryʼs automotive production industry is highly dependent on external demand.

Figures published this morning by the Hungarian Central Statistical Office (KSH), show that Hungaryʼs gross domestic product was up 0.9% in the first quarter of the year as compared to the same period a year earlier, but was down 0.8% from the preceding quarter. 

The minister said he considers the slowdown in growth temporary, as new orders in the construction sector are rising, the number of home building permits issued in the first quarter doubled and employment figures are also up compared to the same period a year ago, Hungarian news agency MTI reported.

Varga said out of the planned HUF 500 billion in EU funding only around HUF 150-160 bln has been distributed and tenders have also been called at a slower pace, MTI added.

Figures by KSH show that in the first quarter services slightly increased GDP growth while industry represented a minor and the construction sector a major drag on growth.

KSH is scheduled to publish a second reading of Q1 GDP statistics on June 7.

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