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Q4 GDP growth better than expected - analysts

Parliament

Hungary's economy grew at a faster than expected clip in the fourth quarter, analysts told MTI on Wednesday.

Hungary's GDP growth was an unadjusted 1.4% in Q4 and 1.7% for the full year, the Central Statistics Office (KSH) said on Wednesday.

Péter Duronelly of fund manager Budapest Alapkezelő said investments probably edged down, domestic consumption stagnated and export growth accelerated slightly during the period. He added that the second reading of the data was likely to show the structure of growth was different in Q4 than for the full year.

He projected a 2% contraction of Hungary's economy in 2012.

Gergely Suppan of TakarékBank said the data were a positive surprise. He added that the quarter-on-quarter growth of 0.3% in Q4 could help Hungary avoid the classic definition of a recession.

He said Q4 growth may have been supported by investments in the machinery sector.

Looking ahead, he said GDP could decline quarter-on-quarter due to government austerity measures and tax changes, but added it could grow again in Q2, partly thanks to the recovery in Germany and the start of production at a plant Daimler is building in Hungary.

Banking sector loss related to the FX mortgage prepayment scheme has been accounted for as capital transfer to households and thus has no impact on GDP growth, Citi analyst Eszter Gárgyán said, citing comments from the statistical office. She attributed the gap between their own, lower forecast and the outcome to the prepayment loss accounting.

KSH statisticians said when the data was released that output of the farm sector was "clearly massive" last year and added that the apparent halt in the decline of the construction sector was a "real surprise", Dow Jones reported.

KSH statistician Péter Szabó said the recently announced layoff of 2,300 people at the Hungarian base of Finnish handset maker Nokia was likely to have a negative effect of several tenths of a percentage point on GDP growth in the first quarter. He added that the effect of national carrier Malév's bankruptcy on GDP would probably be small as the losses the company stops generating are offset by a drop in transit traffic and orders to local suppliers.

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