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KSH flash: GDP growth 4.9% in second quarter

Unadjusted growth in Hungaryʼs gross domestic product (GDP) was 4.9% in the second quarter of 2019, shows a flash estimate from the Central Statistical Office (KSH) released Wednesday. The rate was over the 4.7% estimate of analysts polled by business news site, state news agency MTI noted.

According to seasonally and calendar-adjusted and reconciled data, GDP was up by 5.1% in the second quarter compared to the corresponding period of the previous year, when adjusted year-on-year growth was registered at 4.7%.

The Q2 2019 rate of growth decelerated from Q1 2019, when both unadjusted and seasonally and calendar-adjusted growth was 5.3%.

The main contributors to Q2 growth were industry, construction and market-based services, the KSH noted.

Compared to the previous quarter, the volume of gross domestic product grew by 1.1% – according to seasonally and calendar-adjusted and reconciled data – in Q2 2019.

Unadjusted growth in the first half of 2019 was 5.1% (compared to 4.8% in H1 2018), while the seasonally and calendar-adjusted and reconciled figure for H1 2019 is 5.2%, the KSH added.

Hungaryʼs updated Convergence Program estimates GDP growth in 2019 as a whole at 4.0%, MTI noted.

A second estimate of GDP growth in Q2 2019 - and H1 2019 - will be published on August 30.

Analysts surprised

Commenting on the flash report, Péter Virovácz of ING Bank told state news agency MTI that economic growth in Q2 was higher than expected by analysts, and surprising as monthly economic data from different sectors had been auguring a slowdown. In H2, the pace of growth could slow further and for the year GDP could grow by around 4.5%, he added.

Gergely Suppan of Takarékbank highlighted the role of foreign direct investments in boosting growth, besides EU funds and domestic consumption. Government measures helping families and the economy could offset negative external effects in H2, leading to average GDP growth of 4.8% for the year, he forecast.

Minister of Finance Mihály Varga said that Hungaryʼs economy is expected to perform well even in H2, which could lift annual GDP growth to around 4.3-4.4%, as the pace of economic expansion is faster than what the ministry had forecast.

The minister added that government initiatives, such as a wage agreement with employers, improving competitiveness, home subsidies and government investments, raised economic growth by 1.6 percentage points. Economic growth is still being fuelled by household consumption, increasing export capacities and more efficient use of EU funds, he added.