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Hungary Q1 GDP growth revised slightly up to unadjusted 2.5% in 2nd reading

Hungary's GDP rose by an unadjusted 2.5% and a calendar-adjusted 2.4% year-on-year in the first quarter of 2011, and was up by a seasonally and calendar-adjusted 0.7% from the fourth quarter, the Central Statistical Office (KSH) said in a second reading on Thursday.

Both yr/yr growth rates were revised up by 0.1 percentage points from an unadjusted 2.4% and a calendar-adjusted 2.3% in the first reading published on May 13.

Quarter-on-quarter growth was unchanged from the preliminary figure.

Yr/yr GDP growth picked up from an unadjusted 1.9% and a calendar-adjusted 1.7% in Q4 2010, and quarter-on-quarter also accelerated from 0.5% in the last quarter of last year.

Yr/yr growth was the highest since Q4 2006 when it grew an unadjusted 3.4% and a calendar-adjusted 3.6%.

Industrial exports remained the engine of growth, KSH said.

Value added in industry rose 11.4% yr/yr in Q1, including a 13.2% rise in export-oriented manufacturing. The paces matched those in Q2 2010 and were from a relatively low base. Industry on the whole contributed 2.5 percentage points of overall GDP growth.

In an adjusted quarter-on-quarter comparison, GDP in industry rose 2.9%, and rose 4.5% in manufacturing industry alone.

GDP produced by agriculture rose 2.5% yr/yr, in the first rise since Q1 2009. The sector's GDP rose a steep 9.2% from Q4.

GDP in the construction sector fell 9.2% yr/yr as a steady yr/yr construction ongoing since Q3 2007 continued. It declined 2.7% q/q.

GDP in services was practically unchanged from a year earlier, slipping 0.1% after two quarters of moderate growth which followed eight quarters of contraction. The only branch registering a decline, of 1.4% yr/yr in the sector was financial, property and economic services, pressured mainly by banks' dropping lending activity, KSH said.

On the utilization side, household consumption spending fell 0.8% yr/yr, as it did in each quarter since Q4 2008, except for a 0.8% rise in Q3 2010. Households spent less in volume terms on food, transport or cultural services and spent slightly more on telecom services and

In-kind social support from the government fell 0.4% yr/yr as a rise in Q3 2010 proved temporary, and in kind social contribution from non-profit institutions fell 1.9% as it did each quarter since Q3 2009.

Final household consumption on the whole fell 0.8% yr/yr, similar to Q4 2010.

Government consumption rose, in contrast a steep 3.8% in Q1 following a 7.6% drop in Q4 last year and a hardly smaller rise in Q1 2010. With the above exception, government consumption has risen steadily yr/yr in each quarter since Q4 2009. It contributed 0.4%-points of the yr/yr Q1 growth. It rose 3.1% on the quarter, in the biggest rise since a jump in Q1 2006.

Gross fixed capital accumulation fell only 1.6% yr/yt, declining the least since the contraction started at the beginning of 2009. Investments fell in most branches, including steep declines in home construction and freight, but rises in the manufacturing sector, thanks to big individual projects in the vehicle and electronics segments, and in the utilities segment thanks to power plant construction and network expansions. It fell just 0.1% on Q4.

Inventories declined HUF 7 billion in nominal terms as compared to a HUF 19.6 billion decline in Q4 and a HUF 175.1 billion decline one year earlier. A rise in the inventories of several key manufacturing branches and retail trade could compensate the drop of gas reserves consumed and the declines registered with telecom and agricultural companies, KSH said.

Change in inventories and statistical error combined added 1.7 percentage points to growth.

Both exports and imports rose 14.4% yr/yr, with both rising at a stronger pace than in the previous two quarters. Net exports contributed 1.2 percentage points to Q1 GDP growth. Exports rose 5.5% on the quarter and imports rose 5.3%, in the steepest rises since Q1 2008.

Seasonally and calendar adjusted GDP, used by the Eurostat, rose 2.2% yr/yr in Q1.

In an annual comparison Hungary's GDP has risen now for the fifth quarter in a row after five quarters of contraction between Q4 2008 and Q4 2009. GDP contracted quarter-on-quarter between Q2 2008 and Q3 2009, and has risen at rates varying between 0.1% and 0.8% since Q4 2009.

Hungary's GDP grew an unadjusted 1.2% last year after contracting 6.7% in 2009. Calendar-adjusted figures showed 1.1% growth in 2010 after a 6.5% contraction in 2009.