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Hungary’s Q1 GDP falls steeper 6.1% in 2nd reading

Hungary's first-quarter GDP fell an unadjusted 6.7% and a calendar year-adjusted 6.1% from the same period a year earlier, the Central Statistical Office (KSH) said in a second reading.

The declines are bigger than the unadjusted 6.4% and the adjusted 5.8% drops in the first reading.

In a quarter-on-quarter comparison, Hungary's seasonally-adjusted GDP dropped 2.5% in the second reading, steeper than the 2.3% fall shown by preliminary figures.

In a year-on-year comparison, Hungary's economy started contracting in Q4, by an unadjusted 2.5% and an adjusted 2.7%. In a quarter-on-quarter comparison, the economy contracted for the fourth quarter in a row.

GDP of Hungary's goods-producing sectors fell 14.6% in Q1 from a year earlier as gross value added produced by industry fell 17.6%, including a 20.5% drop in the manufacturing industry. The farm sector contracted 9.8%. The construction sector declined the least, by 4.2%, because of a low base and new orders for road construction and Hungary's planned fourth underground line.

The service sector contracted a below-average 3.2%, including a steep 7.2% drop in the trade, repair, hotels and catering segment, a 3.8% fall in the transport, storage and communications segment and a 3.2% decline in the financial and real estate services segment. Gross value added was unchanged in the public administration, education, health and social services sector.

Domestic use fell 9.6% in Q1 from a year earlier as household final consumption fell 5.9%, including a 7.3% decline in household spending and a moderate 0.3% fall in in-kind government transfers. Government consumption was unchanged and final consumption fell 5.2%.

Gross fixed capital formation fell 6.9%, reflecting a drop in investment activity in most sectors. The fall was the steepest in the manufacturing and the transport, storage and telecom sectors. The real estate services segment expanded moderately.

Stock of inventories fell significantly, which is unusual for Q1, KSH said. Stock of gas reserves as well as stock of vehicle fuel trade and vehicle parts trade companies dropped sharply.

Net exports tempered the overall drop in GDP, slipping 18.6%, under the 22% decline in imports. Exports of goods fell 21.7% and exports of services rose 1.5%. Imports of goods fell 25.0% and imports of services fell 2.4%, mainly because of a decline in tourism services, KSH said.

Hungary entered a recession in Q3 2008, according to the textbook definition of two consecutive quarters of negative quarter-on-quarter growth. After a 1% seasonally-adjusted increase in the first quarter of 2008, GDP fell 0.3% in Q2, 0.9% in Q3 and 1.8% in Q4. KSH revised the last two quarter-on-quarter figures downward from a 0.8% fall in Q3 and a 1.5% fall in Q4.

Hungary's GDP rose an unadjusted 0.6% and a calendar year-adjusted 0.4% in 2008. In 2007, the economy grew an adjusted and unadjusted 1.2%. (MTI – Econews)