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GDP figures expected but ‘warrant cautious view,’ say analysts

Analysis

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Both the year-on-year and month-on-month GDP figures for Hungary in the third quarter, published today by the Central Statistical Office (KSH), met the expected market consensus of 2.0-2.1% growth, according to a flash sent to the Budapest Business Journal by CIB Bank analysts, which nevertheless urges caution.

“Q3 GDP posted a y/y growth rate in line with the market consensus of 2.0-2.1%, but (similar to Q2) both the working day-adjusted and seasonally and working day-adjusted figures warrant a cautious view of the growth data as they show weaker dynamics compared to the raw (unadjusted) figure,” the CIB Bank flash says. “Both the y/y data and the q/q figure (0.2%) show that in Q3 2016 GDP growth was lagging behind the performance of Q2,” the flash added.

Unadjusted year-on-year third-quarter GDP growth came to 2% (with Q2 revised to 2.8%). The working day-adjusted (WDA) figure came to 1.8%, while the seasonally and working day-adjusted (SWDA) figure was 1.4%, CIB recalled with regard to the preliminary data published today.  

Market-based services, and partly agriculture, were the main factors in the third quarter supporting GDP growth, according to the flash. “However, this time the quarterly performance of industry showed stagnation. Construction kept delivering a negative contribution [another figure the KSH announced today], similar to Q2, despite an extremely weak first quarter with double-digit drops. The service sector was supported further by strengthening domestic demand. Despite the relatively weaker industrial performance, net exports were still probably negative contributors to growth, with moderate dynamics on the import side.”

Until the second estimate is published on December 6, CIB Bank is foreseeing an annual GDP growth rate close to or slightly above 2% this year. The forint showed no significant reaction to the data releases in the first hour, CIB Bank said, adding that following a positive correction early in the morning, the EUR/HUF cross rate hovered close to 309.50.

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