Hungary’s economy grew 0.9% quarter-on-quarter in the third quarter, after four consecutive months of contraction, the
Output declined by 0.4% (chart) on an annual basis in the July-September period and by 0.3% when adjusted to calendar effects and by 1.2% in the first nine months, at the same clip as in the preliminary reading. The figures were in line with expectations.
On the production side, services contributed 1.7pp, industry 0.9, construction 0.1 and the balance of taxes and subsidies on products 1.1pp to the headline decline. The farm sector mitigated the drop by 3.4pp. On the expenditure side, gross capital formation contributed 5.3pp to the headline decline and the trade balance reduced the drop by 5.0pp.
On a quarterly basis, on the production approach, the performance went up by 0.6% in industry, by 2.7% in construction and by 3.4% in agriculture, while services fell by 0.9%.
From the expenditure approach, the volume of household final consumption expenditure rose by 1.5%, that of social transfers in kind from the government by 1.2% and the volume of the actual final consumption of the government by 1.0% out of the components of actual final consumption. Gross fixed capital formation fell by 2.8% and external trade stagnated.
The robust growth of agricultural value, up 88.2% y/y in Q3, was attributed to the base effects as
The industry and construction registered growth on a quarterly basis, but that was not enough to lift these sectors out of recession,
The robust growth of the construction sector was tied to the completion of specific construction projects, namely the 2023 World Athletics Championships held in
The service sector remained a drag on growth both on an annual and quarterly basis, given the declining purchasing power of households, according to the forecast.
The fourth quarter promises to be no different, as domestic demand remains sluggish.
Despite real wages turning positive in September, consumer confidence is at a10-year low and households have depleted savings and many are taking out personal loans to finance daily consumption. The government's tight fiscal policy and the absence of EU funds will deter growth. The cautious monetary easing of the central bank will result in positive real interest rates, which continues to keep borrowing costs elevated, also stifling a rebound in investments,
Fourth-quarter GDP could turn positive in annual terms, but that will not be enough to push
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