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Surprising 1.7% upward swing for Hungary GDP

Analysis

Reported the Central Statistics Office (KSH) in a flash estimate: On the basis of the preliminary estimation of HCSO, the gross domestic product of Hungary increased by 1.7% in the third quarter of 2013 compared to the corresponding period of the previous year. The increase was mainly due to the increasing performance of agriculture, manufacturing and construction. 

According to adjusted data, GDP increased 0.8% quarter-on-quarter. 

The estimate makes sense of major economic forecasters having recently upwardly adjusted their predictions for GDP growth through 2014: Brussels-based business-lobby group BusinessEurope yesterday recast their prediction to 1.3% for next year while last week, JP Morgan analysts and the European Bank of Reconstruction and Development (EBRD) jumped previous forecasts for Hungarian GDP in ’14; the former now predicts a 2.0% increase, with the latter figuring on a 1.2% uptick.

Local business news outlet Portfolio.hu registered astonishment at the 1.7% mark, both headlining and leading reportage by calling the number a “massive upside surprise.”

The aforementioned article provides a nice roundup of analyst opinions in response to the news (click on the previous embedded link to read), but BBJ will pass on a quote from Orsolya Nyeste and Gergely Gabler of Erste: “The outlook is rather positive, we expect that the internal consumption will also contribute positively in the near future. Retail sales is still on a very low level which creates good basis for a more robust growth, but the record low CPI could also give a boost to consumption. Aside for this, we believe that the automotive industry will be strong as well in the coming quarters. However the solid growth in agriculture could end in Q4 as the low base disappears in Q1. The expansive fiscal policy will likely go on until the elections next year and this should give high contribution to the GDP figures.

“Based on the expectations mentioned above, we are about to positively revise our current 0.2% growth forecast for this year and 1.2% forecast for next year.”

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