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Analysts see turn-around in Q3 after steep economic contraction in Q2

A steep 7.6% drop in Hungary's second-quarter GDP from the same period a year earlier is probably the deepest contraction in the country's recession, analysts told MTI on Thursday after the Central Statistical Office (KSH) published Q2 data. While Hungary's GDP dropped 7.6% in a year-on-year comparison in Q2, in a quarter-on-quarter comparison, it fell 2.1%, slowing - for the first time in five quarters - from 2.6% in Q1, KSH said Thursday morning. The consensus in an earlier poll by Reuters was for a contraction of 7.1%.

Raiffeisen Bank's Zoltán Török said the decline in GDP could slow in the second half of the year. The Q2 data was more or less in line with expectations, he added.

CIB Bank's György Barta also said the economy could start to stabilize in Q3, though he projected stagnation in 2010.

Both Török and Barta said an end to Hungary's recession would depend much on improvements in the American economy and economies in Western Europe. Hungarian households will feel the economic pick-up only long after it shows up in GDP data, they added.

Magyar Takarékszövetkezeti Bank's Gergely Suppan said fresh German and French GDP data were a positive surprise and bode well for a moderating contraction in Hungary, in spite of tax hikes introduced in July. Hungary's economy will probably contract by more than 6% in 2009, but expand slightly in 2010, mainly because of the low base, he added. (MTI-Econews)