Hungary’s economic growth continues to disappoint

By bne IntelliNews November 13, 2015

Hungary’s economy grew 2.3% on an annual basis in the third quarter of the year, statistics office KSH said in a flash estimate on November 13.

The result showed growth easing from 2.7% in the second quarter and 3.5% in the first three months of the year. Growth was also weaker than expected by the market, as analysts were looking for a GDP hike of 2.5%.

The continued slowdown suggests that domestic consumption is not able to fully counterbalance slowing industrial production and the decreasing performance of construction and agriculture, KBC writes in a note.

On a quarterly basis, GDP edged up 0.5% in July to September, keeping the same pace as in the previous two quarters. The reading was in line with market consensus.

Third-quarter growth was the weakest in two years, and puts Hungary behind all other countries in Central Europe. The country was also the only one in the region to post GDP figures below market expectations, analysts at Capital Economics point out. “It has gone from being the region’s fastest growing economy last year to the slowest in Q3”, they note.

Looking ahead, expectations for the last quarter are for growth to bounce back closer to 3% y/y and full-year growth to reach 2.7% on the back of accelerated use of EU funds and stronger industrial production and domestic consumption, KBC analysts project.

If Q4 GDP surprises to the downside, however, the central bank may begin – in March 2016 at the earliest – a new easing cycle to support GDP growth, according to Erste.

Related Articles

Hungarian retail investors continue to pile into domestic government bonds

The stock of government bonds held by households rose by HUF154bn (€500mn) September to an all-time high of HUF6.5 trillion, Hungary’s Government Debt Management Agency (AKK) said on October 16. ... more

Ukrainian central bank bans Russian banknotes, coins depicting occupied territories

The National Bank of Ukraine (NBU) has forbidden local banks and the country's financial institutions to perform any cash transactions using the new banknotes and coins issued by the Russian central ... more

Erdogan says he plans talks with lenders on cutting Turkish interest rates

Turkey's President Recep Tayyip Erdogan said on October 13 that he plans to hold talks with both public and private lenders on how to lower interest rates. He did not say, however, when those ... more

Dismiss