Hungarians shopped less in the second quarter of 2023 than a year earlier

The Hungarian Central Statistical Office (KSH) has published detailed data on the second quarter of 2023.

As previously reported based on the first estimate, Hungary's gross domestic product (GDP) dropped by 2.4 percent in the second quarter, or according to seasonally and calendar-adjusted and reconciled data by 2.3 percent, compared to the same period of the previous year, which is the worst result since 2020. The latest report also reveals that it is only thanks to the good performance of Hungarian agriculture that the economy's second quarter results aren't even worse.

Industrial output fell by 5.7 percent, manufacturing by 4 percent and the added value of construction dropped by 6 percent.

Agriculture, on the other hand exceeded the results from April-June 2022 by 67.9 percent.

This is because agricultural production was down last year due to an extremely dry summer, but this year, following a particularly rainy spring, agriculture was expected to have a good year, which it did.

The service sector did not perform well either, with its gross added value declining by 2.4 percent. However, the health sector showed an outstanding increase of 10.2 percent, which, according to a Hvg.hu article, was due to the performance of private health care providers. The other areas did not manage to produce similarly good figures:

• in commerce, the decline was 12.6 percent,
• tourism and hospitality were down by 2.9 percent,
• logistics dropped 6.2 percent,
• and arts, entertainment and recreation dropped by 1.4%.

Although household expenditure on services increased marginally (by 0.7 per cent), it is striking that the consumption of non-durable and semi-durable goods fell by 9 and 4.2 per cent respectively, meaning that people spent less in stores but did not save as much on services.

Overall, actual household consumption thus fell by 1.6 percent.

Gross savings fell by 21.3% compared to the same period last year. Exports, on the other hand, managed to grow, if only slightly, by 0.2%.

Speaking about the economic recession and the 2.3 percent drop in GDP at the government briefing on 24 August, Minister at the Prime Minister's Office, Gergely Gulyás said that the government would wait for the data on the third quarter, and would amend the budget based on that.

Nevertheless, the government is optimistic: the Finance Ministry expects the Hungarian economy to return to the path of growth in the second half of the year and anticipates its performance to be above the EU average again next year.