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Hungary GDP growth decelerates to 4.5% in Q4

Hungaryʼs GDP rose 4.5% year-on-year in the fourth quarter of 2019, state news wire MTI reported, citing the first reading of data by the Central Statistical Office (KSH).

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Growth slowed from 5% in Q3. GDP growth was exceptionally strong in the first quarter, reaching 5.3% before slowing to 4.9% in Q2.

Full-year GDP growth reached 4.9% in 2019. In 2018 full-year growth was 5.1%, up from a 4.3% growth rate in 2017.

Adjusted for seasonal and calendar year effects, Q4 GDP growth was 4.6%.

KSH said market-based services, as well as the industrial and construction sectors, contributed the most to growth in Q4.

The seasonally and calendar year adjusted annual growth rate was 4.9% in 2019, down from 5.1% in 2018 but up from 4.5% in 2017.

Analysts polled by MTI said the Q4 GDP figure came as a positive surprise, adding that they expected the moderate slowdown to continue this year.

Péter Virovácz of ING Bank noted that both industrial output and construction-sector output showed a significant decline according to monthly data, adding that added value probably grew faster than output itself thanks to improved efficiency and the service sector is likely to have made a bigger-than-expected positive contribution. ING Bankʼs analysts forecast 3.8% average GDP growth in 2020.

Dávid Németh of K&H Bank predicted 3.7% economic growth this year on the more subdued performance of the global economy, the end of the current EU budget cycle and the effect of the coronavirus outbreak.

Gergely Suppan of Takarékbank said he projected GDP growth of 4% this year and 3.6% in 2021.

 "The Hungarian economy is among the fastest-growing economies in the European Union, its performance was among the top three in 2019, just as earlier years", and the latest GDP data "exceeded the expectations of the government and the Finance Ministry", Mihály Varga said, commenting the fresh economic growth data.

Considering external downside risks such as challenges faced by the German automotive industry, the effects of the coronavirus outbreak on tourism and supply chains, problems between the United States and China, and the United States and Europe, as well as the significant global indebtedness, the Finance Ministry corrected its earlier 2020 GDP growth forecast of 4% to 3.5%, Varga said.