Hungary’s gross domestic product volume was 1.5% higher according to raw data and 1.3% higher according to seasonally and calendar-adjusted and reconciled data in the second quarter of 2024 than in the corresponding period of the previous year. Compared to Q1 of this year, the economic performance lessened by 0.2% according to seasonally and calendar-adjusted and reconciled data.
In the first half of 2024, the performance of the economy was 1.3% higher according to raw data and 1.5% higher according to seasonally and calendar-adjusted and reconciled data than in the same period of the previous year, the second reading of Hungary’s Q2 GDP data shows.
The fresh report, which the Central Statistical Office (KSH) released on September 3, reveals that in the second quarter, the industrial performance fell by 2.4%, within which manufacturing was down by 3.7% compared to the same period of the previous year.
Among manufacturing branches, the most significant contributors to the decrease were the manufacture of electrical equipment and the manufacture of motor vehicles, trailers and semi-trailers. In contrast, the manufacture of food products, beverages and tobacco products slowed the fall in industry most.
The value added of construction was 6.2% higher, while that of agriculture was, as a consequence of this year’s drought, 5.2% lower than in the corresponding period of the previous year.
The gross value added of services increased by 2.4% in total. The highest increase (7.2%) occurred in accommodation and food service activities. The value added of arts, recreation and other service activities was up by 6.9%, human health and social work activities by 4.7%, and information and communication by 3.3%.
The report also shows that positive contributors to the 1.5% increase in GDP in the second quarter of 2024 were services (up 1.4 percentage points), the balance of taxes and subsidies on products (up 0.4 of a percentage point) and construction (up 0.3 of a percentage point). Agriculture lowered the performance of the economy by 0.2 of a percentage point and industry by 0.5 pp. Within services, real estate activities contributed the most (up by 0.3 of a percentage point) to the growth of GDP.
The actual final consumption of households was up by 4% compared to the same period of the previous year. Household final consumption expenditure (representing the largest proportion of the components of the actual final consumption of households) increased by 4.2%. The domestic consumption expenditure of households was 4.1% higher.
The volume of domestic consumption expenditure rose in all durability groups: by 9.1% in the case of durable goods, by 2% for semi-durable goods, by 4.3% in the case of non-durable goods and by 3.6% for services.
The volume of social transfers in kind from the government went up by 3.4%, while the actual final consumption of the government diminished by 3.9%. The volume of social transfers in kind from non-profit institutions serving households grew by 2.5%. As a result of the above trends, actual final consumption increased by 2.7%.
Gross fixed capital formation fell by 15.4% in Q2 compared to the corresponding period of the previous year. Both the volume of investments in construction and that of investments in machinery and equipment went down, the volume of the latter measurably. Of the industries with the highest share of investments, the volume of developments dropped at a higher rate than the average in manufacturing and in transportation and storage, and grew for real estate activities.
Actual final consumption contributed 1.9 percentage points to the 1.5% increase in GDP, while gross capital formation slowed it by 1.4 percentage points. The balance of external trade as a whole raised the economic performance by 1 percentage point.
Regarding production, the performance of construction went up by 2.5% while services remained unchanged. The performance of industry decreased by 1.5% and agriculture by 5%.
On the expenditure side, the volume of household final consumption expenditure was 1.1% higher, social transfers in kind from the government 1% higher, and the volume of the actual final consumption of the government 0.5% lower. Gross fixed capital formation fell by 6.7%. In external trade, the volumes of exports and imports as a whole increased by 0.7% and 0.5%, respectively.
ING Bank’s senior analyst Péter Virovácz highlighted from the latest data that consumer confidence has continued to deteriorate although real wages are increasing. Based on the previous partial data, the expert was unsurprised that the companies had significantly slowed their investments. He does not even expect a turnaround in the latter.
Despite the latest data, which clearly shows that this year is not a huge success story for the Hungarian economy, the rate of economic growth next year could be 3.6%, which would be one of the highest in the region, according to the ING Bank’s updated expectations released on Sep. 4.
This article was first published in the Budapest Business Journal print issue of September 6, 2024.
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