Hungary’s economic output increased by 0.5% y/y in Q2 2013, after a 0.9% contraction in Q1, the statistics office said, confirming the flash estimate. The annual growth in GDP in Q2 was the first since Q4 2011.

The seasonally and calendar adjusted data showed GDP increasing by 0.1% q/q in Q2 2013, slowing down from 0.6% q/q rise in the previous quarter.

On the supply side, the agriculture output increased by 17.2% y/y in Q2, which was partly due to low base effect. The sector contributed with 0.5pps to the GDP growth. The construction sector increased by 6.9% y/y, on the back of better performance in both construction of buildings and the civil engineering segments. The growth in Q2 speeded up from 2.1% y/y in Q1 and contributed with 0.2pps to the GDP in Q2.

By contrast, industrial production dropped by 0.8% y/y on a 0.6% y/y fall in manufacturing. Thus the industry, which had been a key growth driver in previous periods, contributed with a negative 0.2pps to the GDP growth. Within manufacturing, the highest drop was recorded in the manufacture of basic pharmaceutical products and pharmaceutical preparations, mainly due to the lower external demand. On a positive view, the manufacturing of transport equipment expanded in Q2. Services edged up by 0.1% y/y in Q2 and contributed by 0.1pps to GDP growth. Within this group, the information and communication as well as real estate performed well in the observed period.

On the demand side, gross capital formation increased by 8.7% y/y, as investments saw a 4.6% annual growth in Q2. Gross capital formation contributed with 1.3pps to the GDP growth in Q2, marking the first positive contribution since Q2 2011. Consumption increased by 0.3% y/y, due to rising private and government consumption as well, up 0.3% y/y and 0.6% y/y respectively. Net exports had negative contribution (1.2pps) to the GDP growth in Q2 after exports increased by 3% y/y in Q2, slower than imports’ growth of 4.7% y/y. Net export had positive contribution to GDP in every quarter between Q4 2008 and Q3 2012 before becoming a negative factor Q4 2012. However, in Q1 2013 it also had positive (0.7pps) contribution.