Hungary's economy grew by 3.9% y/y in the second quarter of 2014, speeding up from a 3.7% y/y rise in the previous three months, the statistics office said on September 3, confirming the flash estimate released two weeks ago. The seasonally and calendar adjusted data showed GDP increasing by 0.8% q/q in Q2, following a 1.1% q/q rise in Q1 2014.

On the supply side, industry expanded by 7.2% y/y in Q2, growing for the fourth quarter in a row after declining in the previous five quarters. The manufacturing industry grew by 9% y/y in Q2, easing from 9.7% y/y in the previous quarter. Within manufacturing, the manufacture of transport equipment and the related supplier branches grew significantly. Industry contributed by 1.6pps to the quarterly GDP growth.

The construction sector increased by 19.1% y/y supported by both construction of buildings and the civil engineering segment. The growth in Q2 slowed down from 24.4% y/y in the previous quarter and contributed by 0.6pps to the quarterly GDP growth.

The gross value added of the services sector was up 2.1% y/y in Q2, faster than the 1.5% y/y rise in Q1 2014. Within services, all sectors saw an annual increase with the exception of financial and insurance as well as real estate activities. The service sector had a 1.2pps positive contribution to GDP growth.

The agriculture output increased by seasonally and calendar adjusted 5.6% y/y in Q2, speeding up from a 2.4% y/y rise in the previous quarter. The sector contributed with 0.2pps to the GDP growth in the quarter.

On the demand side, gross capital formation increased by 17.4% y/y as investments registered a 18.7% annual growth in Q2. Gross capital formation contributed with 2.9pps to the GDP growth in Q2, higher than in the previous quarter (+1.9pps). Consumption increased by 1.1% y/y, driven by a 1.6% rise in private consumption and a 0.4% y/y rise in government consumption. Consumption has a positive contribution of 1pps to the GDP growth in Q2. Net exports had a neutral effect on the GDP growth in the period, after exports increased by 6.7% y/y and imports were up by 8.3% y/y.

In the light of the Q2 GDP data, the annual economic growth in full-2014 could exceed 3%, the economy ministry commented earlier.