Hungarian economy slowing down, fresh GDP data reveals
December 01. 2022. – 03:18 PM
The volume of Hungary's gross domestic product (GDP) grew by 4.0% in the third quarter compared with the same period of the previous year. According to the seasonally and calendar-adjusted and balanced data, the economy's output rose by 4.1 percent year-on-year, while it declined by 0.4 percent in comparison with the previous quarter, the Hungarian Central Statistical Office (KSH) confirmed on Thursday, based on its second estimate.
In the first three quarters of the year, the economy's performance – both in raw and seasonally, as well as calendar-adjusted terms – was 6.1 percent higher than in the same period of the previous year.
On a year-on-year basis, manufacturing output grew by 10.6 percent, construction by 1.8 percent, value added by services rose by 5.6 percent compared to the third quarter of last year, while agricultural output fell by 39.3 percent due to the severe drought in the summer.
The 0.4% decline in GDP compared to the previous quarter was caused by a 5.2% drop in agriculture performance and a 0.7% decline in services, while manufacturing grew by 2.2% and construction by 0.1%. As far as the service sector goes, the performance of transportation and storage was 1.9 percent below the second quarter results. The drop was 1.8 percent in arts, entertainment, recreation and other services, while the performance in other areas of service at least stagnated or increased.
Commenting on the latest data, Péter Virovácz, senior analyst at ING, told Magyar Hang that he believes Hungary has entered the antechamber of a technical recession and he expects a further decrease in the GDP in the fourth quarter compared to the third quarter results.
Prime Minister Viktor Orbán's unconventional speech earlier this week made it quite apparent that the grim reality is that the Hungarian economy could stagnate or at most show only very minimal growth throughout 2023. Orbán set this out in his speech as follows:
- 'In the energy crisis we are in, the previous models for managing the situation are not applicable;
- We need to build our own lifeboat for the Hungarian economy: one that can both protect the population from the soaring energy prices and keep the Hungarian companies afloat;
- energy, inflation and interest rates will hit Hungarians too;
- 10 billion euros, or roughly 4,000 billion forints, will have to be found in the budget somewhere;
- the state is not able to lower social security or other contributions, because we are already at the wall, there is nowhere to retreat to.
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