Hungary Q2 GDP growth accelerates to 2.6pc – UPDATE

Budapest, August 12 (MTI) – Hungary’s GDP rose by an annual 2.6 percent in the second quarter, accelerating from 0.9 percent growth in the first quarter, the Central Statistical Office (KSH) said in a first reading of data released on Friday.

KSH said market services, industry and the farming sector contributed the most to the increase. Construction sector output continued to weigh on growth, it added.

Adjusted for calendar year effects, GDP in the second quarter climbed by an annual 2.2 percent, picking up from 0.8 percent in January-March.

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Adjusted for both calendar year and seasonal effects, the growth rate came to 1.7 percent.

In a quarter-on-quarter comparison, GDP climbed a calendar year- and seasonally-adjusted 1.1 percent in Q2 after contracting 0.7 percent in Q1.

Speaking at a press conference after the data was released, Economy Minister Mihály Varga said growth had “returned to normal” in Q2 after a temporary slowdown in Q1. Headline growth exceeded the ministry’s own expectations, he added.

Growth in the second half of the year will be supported by a pickup in home construction spurred by the government’s expanded subsidy scheme, higher wages, an acceleration in the absorption of European Union funding and a strong performance in the farm sector, Varga said. The government is standing by its target for full-year GDP growth of 2.5 percent, he added.

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Péter Virovácz of ING Bank said that based on the fresh data average GDP growth for the year could be higher than the 2.2 percent predicted earlier. However to reach the 2.5 percent GDP growth target set by the government domestic output would need to rise by an outstanding 3.2 percent on average in the second half of the year.

CIB Bank said they will likely revise their growth forecast for the year once detailed GDP data are available. Based on the first reading of quarterly data, GDP growth for the year could be modestly above 2 percent.