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Flash estimate: GDP up 5.3% in Q1 2019

The gross domestic product of Hungary rose by 5.3% according to raw data, and by 5.2% according to seasonally and calendar-adjusted and reconciled data, in the first quarter of 2019 compared to Q1 2018, says a flash estimate from the Central Statistical Office (KSH) released Wednesday.

The main contributors to the growth were industry, construction and market-based services, said the KSH.

State news wire MTI noted that the rate was over the 5.1% estimate by analysts polled by business news site Portfolio.hu.

The annual pace of growth accelerated from 5.1% in the fourth quarter of 2018. In a quarter-on-quarter comparison, GDP growth was up 1.5% in Q1 from the previous quarter, adjusted for seasonal and calendar year effects.

Annual growth in Q1 2018 was 4.6%, while for the entire year of 2018 it was 4.9%.

Hungaryʼs updated EU Convergence Program forecasts GDP growth in 2019 as a whole at 4.0%. The program puts GDP growth at a similar 4.0% in 2020, 4.1% in 2021, 4.2% in 2022, and 4.0% in 2023.

In a quarterly forecast released in April, the European Commission raised its own projection for Hungaryʼs GDP growth this year from 3.4% to 3.7%, but slowing to 2.8% in 2020.

In its World Economic Outlook, also published in April, the International Monetary Fund (IMF) raised its projection for Hungaryʼs GDP growth this year to 3.6%, up from 3.3% in a forecast released last October. The IMF likewise sees growth slowing to 2.7% in 2020, however.

A second, more detailed reading of gross domestic product data for the first quarter of 2019 will be published by the KSH on May 31.

Varga remains buoyant on growth

GDP growth in Q1 was fuelled by an increase in investments, exports, jobs and wages, Minister of Finance Mihály Varga said at a press conference Wednesday, noting that the government currently expects GDP to grow by 4.1% in both 2019 and 2020.

The minister said that the last time economic growth in the first quarter of a year was this large was in 2000, while noting that back then - unlike now - government debt was also growing.

TakarékBank analyst Gergely Suppan observed to MTI that industrial and construction sector output are significantly up, retail sales suggest consumption is still high, and the effects from a deteriorating foreign trade surplus are offset by other factors.

ING Bank senior analyst Péter Virovácz said the Hungarian economy continues to perform well, with a growth rate that means it can be expected to be among the fastest-growing EU members in the first quarter. However, he added that GDP growth could decelerate in 2019 as a whole, compared to 2018.