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GDP fall steeper than expected as companies use up stocks

Analysts asked by MTI said Hungary’s Q3 GDP fell more sharply than expected as companies continued to use up their existing stocks, retail trade contracted, and the farm, services and construction sectors dropped more steeply than projected.

Hungary's GDP fell by 7.2% in Q3 from the same period a year earlier, and fell an adjusted 1.8% from Q2, the Central Statistical Office (KSH) said in the morning.

K&H Bank's György Barcza had put the Q3 GDP decline at 6.2%-6.3%. He put the steeper drop down to poor performances in the services, farm and building sectors, as well as the continued depletion of stocks, without replenishing. Also, retail trade fell 6.6% yr/yr in July and fell 7.2% in August.

Hungary's economy will probably contract by 6.5%-6.7% for the full year in 2009, Barcza said. Next year, the decline could come to a halt, but real growth is unlikely, he added.

The fall in consumption and low inflation will have an unfavorable effect on budget revenue, putting the deficit at more risk, Barcza said.

Raiffeisen Bank's Zoltán Török had put the Q3 decline in GDP at 6.1%, saying he thought companies would start replenishing their stocks again. He put the fall for the full year at 6.5%, and said the economy would grow 0.4% in 2010, even as the eurozone expands 1.5%. Companies could start restocking, albeit slowly, in Q4, he added. (MTI – Econews)