KSH confirms 4.4% GDP growth for Hungary in fourth quarter

Analysis

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The volume of Hungaryʼs gross domestic product (GDP) rose 4.4% year-on-year in the fourth quarter and 4.0% in the full year of 2017, the Central Statistical Office (KSH) confirmed in a second, detailed reading of data on Tuesday. The primary contributors to growth in Q4 were market-based services and construction.

The unadjusted pace of growth in Q4 2017 accelerated from 3.9% in the preceding quarter.

According to seasonally and calendar-adjusted and reconciled data, the performance of the economy in Q4 2017 was up by 4.9% compared to the corresponding quarter of the previous year, and by 1.3% compared to the preceding quarter.

According to the production approach, the value added by industry grew by 2.9%, within which manufacturing grew by 3.6% compared to the same period of the previous year. The performance of construction rose by 36%, within which the highest increase was recorded for civil engineering.

The value added by agriculture decreased by 11% compared to a high base a year earlier.

The gross value added by services was up by 3.6% in total in Q4.

Services contributed 2.0 percentage points, construction 1.4 percentage points, and industry 0.6 of a percentage point to the 4.4% growth in GDP in the fourth quarter.

Consumption, investments on the rise

On the consumption side, meanwhile, the actual final consumption of households was up by 5.2% in Q4 compared to the equivalent period of the previous year. Household final consumption expenditure, representing the largest proportion of the components of the actual final consumption of households, grew by 5.6%, within which volume increases were measured in all groups of expenditure.

The domestic consumption expenditure of households realized on the territory of Hungary increased by 5.4%. The volume of social transfers in kind from the government grew by 3.4%.

As a result of the above trends, actual final consumption rose by 5.7%, said the KSH.

Gross fixed capital formation, or investments, in the fourth quarter were 13.1% higher than in the equivalent period of 2016. The volume of investments in construction and in machinery and equipment both went up substantially. A growth in investment was observed in the majority of industries carrying relatively large weight.

In the external trade of the national economy, exports were up by 8.3% and imports by 9.7% in Q4 2017.

Actual final consumption contributed by 4.0 percentage points and gross capital formation by 0.9 of a percentage point to the 4.4% growth in GDP in the fourth quarter.

Full-year growth just short of govʼt target

The unadjusted volume of GDP in 2017 as a whole grew by 4.0%,  slightly under the official government target of 4.1%.

According to seasonally and calendar-adjusted and reconciled data, the performance of the economy rose by 4.2% in 2017 compared to the previous year. In absolute terms, the value of GDP was HUF 38.183 trillion at current prices in 2017.

On the production side, gross value added increased by 32% in construction, by 3.9% in industry and by 3.3% in services, but fell by 9.0% in agriculture.

Services contributed by 1.8 percentage points, construction by 1.0 percentage point and industry by 0.9 of a percentage point to the growth of GDP in 2017, while agriculture lowered growth by 0.3 of a percentage point.

On the expenditure side, the actual final consumption of households was up by 4.1%, while the actual final consumption of the government decreased by 0.4%. As a result of these two items, actual final consumption was up 3.4%.

Gross capital formation was 15% higher, within which gross fixed capital formation rose by 17% in 2017. Exports grew by 7.1% and imports by 9.7%.

A flash estimate of GDP figures for the first quarter of 2018 is due to be published by the KSH on May 15, with a second, more detailed estimate due on June 5.

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