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Hungary's Q2 GDP growth revised up to adjusted 4.1% yr/yr

The figure is up from first estimate of 3.9% reported on August 15. Q2 unadjusted GDP growth was also revised up to 3.8% year-on-year from a preliminary 3.6%. Q2 GDP was up 1.0% from the Q1 according to seasonally-adjusted figures, up from a preliminary 0.9%. In Q1, GDP rose at a calendar year-adjusted 4.4% and an unadjusted 4.6% from Q1 2005, unchanged from a second reading published on June 9. KSH revised seasonally-adjusted quarter-on-quarter growth in Q1 2006 down, however, to 0.7% from 0.8% reported in June. Hungary's GDP growth increased a calendar-year-adjusted 4.3% and an unadjusted 4.1% in 2005. Q2 year-on-year GDP growth was driven by 7.6% higher added value in the industrial sector, including a 7.7% expansion in the manufacturing sector and 4.8% growth in the financial services sector, while GDP produced by agriculture and the construction sector contracted, by 1.4% and 3.3%, respectively, unadjusted figures show.

On the utilization side, Q2 GDP growth was boosted by a 15.1% year-on-year rise of exports of products and services (imports of products and services rose 8.4% year-on-year), while domestic use fell 2% year-on-year according to unadjusted figures. Households' final consumption rose at a below average 2.5% year-on-year. Gross fixed capital formation in Q2 2006 was down 3.6% from a year earlier and dropped a calendar-and seasonally adjusted 0.8% from the previous quarter, in the first drop posted since the start of the decade. The drop in gross fixed assets formation mainly reflected dropping investments in the manufacturing sector and in the property business, KSH said. KSH said that chemicals and machinery branches were the main driving forces behind expansion in the manufacturing sector where growth dropped from a high 11.5% in Q1 but was still up from 6.4% last year. The construction sector contracted 3.3% because of a drop in the volume of motorway and road constructions compared to the previous year. GDP in the construction sector grew 14.4% last year.

Services' contribution to GDP grew 3.3% year-on-year in Q2 2006, helped by 4.8% growth in the financial services and real estate sector. The logistics, postal and telecommunications sector also expanded faster than the 3.8% headline figure, growing 4.3%, mainly reflecting growth in the postal and telecom branches. The trade, repair and catering sector grew 4.2%, largely because of increased retail sales. Hungary's exports rose by 15.1% and imports rose 8.4% from Q2 2006, and the gap between the growth rates widened. Hungary's terms of trade, however, deteriorated, although less than it did in the first quarter, KSH noted. After rising 0.7% year-on-year in Q1, final government consumption rose at a below-average 1.6% year-on-year in Q2, but the rate was still the highest since Q2 2004, and follows year-on-year drops in each quarter of last year.


Household consumption spending rose 2.5% and in kind government social transfers rose 2.2% from a year earlier in Q2, below the 3.8% average GDP growth but up from 1.7% and 0.5% respective increases in 2005. The structure of GDP production was similar compared to the first quarter, as value added in the manufacturing sector increased 1.2%, the same as in services where the financial services and real estate branch expanded the most: by 1.8% from Q1 2006, calendar- and seasonally adjusted figures show. GDP in agriculture fell an adjusted 1.5% and GDP in the construction sector fell 1.8% from Q1. In GDP utilization, Q2 export rose the most, by 2.8% from Q1 while imports grew 1.1%. Compared to the Q1, final government consumption rose by the second highest rate, of 1.2% after a 1.3% quarterly increase in Q1. Household consumption rose 0.6% from Q1 as household consumption spending rose 0.6% and in kind social transfers from the government rose 0.5% from the previous quarter. Q1 GDP totaled Ft 5,198.8 billion and Q2 GDP totaled Ft 5,616.2 billion at current prices. (Mti-Eco)