Central Statistical Office published devastating data on the Hungarian economy

Hungary’s GDP stagnated in the fourth quarter and contracted 0.9 percent in the full year, the Central Statistical Office (KSH) confirmed in a second reading of the data on Tuesday.

In 4th quarter 2023

The volume of GDP was unchanged according to raw data and was 0.5% higher according to seasonally and calendar adjusted and reconciled data than in the corresponding period of the previous year. The raw volume index in the second estimate was unchanged, while the seasonally and calendar adjusted and reconciled index became 0.1 percentage point higher compared to the flash estimate.

Production approach

According to KSH, industry and within that manufacturing both reduced their performance by 6.4% compared to the same period of the previous year. Among manufacturing branches, the largest contributors to the decrease were the manufacture of machinery and equipment not elsewhere classified and the manufacture of electrical equipment, while the manufacture of coke and refined petroleum products and the repair and installation of machinery and equipment slowed the fall in industry the most. The value added of construction was 7.4% lower than in the corresponding period of the previous year, while that of agriculture was 81.1% higher than the low base in the same period of the previous year.

The gross value added of services decreased by 1.0% in total. The highest increase (8.3%) occurred in human health and social work activities. The performance of information and communication was up by 5.0%, those of accommodation and food service activities as well as of arts, recreation and other service activities both by 3.6% and the performance of education by 2.6%. The value added of real estate activities rose by 2.1% and that of financial and insurance activities by 0.5%. The volume of the value added of public administration shrank by 1.7%, that of transportation and storage by 4.3%, the volume of the value added of professional, scientific, technical and administrative activities by 4.5% and that of wholesale and retail trade by 8.7%.

Agriculture contributed positively (by 2.5 percentage points) to the unchanged volume of gross domestic product in the 4th quarter of 2023. Industry lowered the volume of gross domestic product by 1.1 percentage points, services by 0.6 percentage point, construction by 0.5 percentage point and the balance of taxes and subsidies on products by 0.2 percentage point. Within services, it was human health and social work activities that contributed the most positively (by 0.3 percentage point) to the development of GDP.

• read also: Orbán cabinet miscalculated by EUR 3.1 billion, budget deficit has become brutal in 2023

Expenditure approach

The actual final consumption of households rose by 1.0% compared to the same period of the previous year. Household final consumption expenditure, representing the largest proportion of the components of the actual final consumption of households, lessened by 0.2%. The (domestic) consumption expenditure of households realised on the territory of Hungary was up by 0.2%. Broken down by durability groups, the volume of domestic consumption expenditure decreased in the case of semi-durable and non-durable goods, by 2.1% and 0.3%, respectively, and rose among services and durable goods, by 0.9% and 1.5%, respectively.

The volume of social transfers in kind from the government went up by 4.6%, while that of the actual final consumption of the government diminished by 3.8%. The volume of social transfers in kind from non-profit institutions serving households (NPISHs) became 10.8% larger.

As a result of the above trends, actual final consumption grew by 0.2%.

Gross fixed capital formation was down by 3.0% in the 4th quarter compared to the corresponding period of the previous year. Both the volume of investments in construction and that in machinery and equipment fell. Out of the industries with the highest share of investments, the volume of developments decreased in manufacturing and in real estate activities, while it stagnated in transportation and storage.

Gross capital formation declined by 13.0% compared to the same period of the previous year.

As a result of the trends of consumption and of capital formation, domestic use as a whole became 4.1% lower in the 4th quarter.

In the external trade of the economy, a surplus of 809 billion forints was generated at current prices. The volume of imports went down at a higher rate (9.0%) than that of exports (4.7%). In trade in goods, accounting for 80% of external trade, imports dropped by 10.4% along with a 6.6% decrease in exports. Within the external trade of the Hungarian economy, the exports of services (including tourism) grew by 3.0% and their imports by 0.6% compared to the same period of the previous year.

The unadjusted, raw volume of gross domestic product remained unchanged in the 4th quarter of 2023. The balance of external trade3 as a whole contributed positively, by 4.1 percentage points and actual final consumption by 0.1 percentage point to the economic performance, while gross capital formation influenced it negatively, by 4.2 percentage points.

In 4th quarter 2023 compared to previous quarter, according to seasonally and calendar adjusted and reconciled data:
The performance of the economy was unchanged.

From the production approach, the performance went up by 4.2% in agriculture and by 1.5% in services. The performance of construction decreased by 1.6% and that of industry by 1.9%.

From the expenditure approach, the volume of household final consumption expenditure rose by 0.8% and that of social transfers in kind from the government by 0.9%, while the volume of the actual final consumption of the government went down by 0.7% out of the components of actual final consumption. Gross fixed capital formation increased by 1.0%. In external trade, the volumes of exports and imports as a whole fell (by 2.0% and 2.3%, respectively).

• read also: Hungarian national bank governor attacks Hungarian government in unprecedented way – UPDATED

Hungarian economy in 2023 compared to previous year

According to the first estimation, the value of GDP was 75,044 billion forints at current prices, its volume decreasing by 0.9%. According to calendar adjusted data, the performance of the economy was down by 0.7% compared to the previous year.

From the production approach, value added grew by 68.5% in agriculture, while it became 1.6% lower in services, 5.2% lower in industry and 5.6% lower in construction.

The performance of agriculture increased the volume of GDP by 2.2 percentage points, while construction lowered it by 0.3 percentage point, services by 0.9 percentage point and industry by 1.0 percentage point.

From the expenditure approach, the actual final consumption of households decreased by 1.2% and the actual final consumption of the government by 1.0%, and as a total result of these, the volume of actual final consumption became 1.2% lower. Gross capital formation declined by 14.4%, within which gross fixed capital formation by 8.7%. The volume of exports went down by 0.1% and that of imports by 5.1%.

From the expenditure approach, actual final consumption contributed by 0.8 percentage point and gross capital formation by 4.9 percentage points to the 0.9% decrease in gross domestic product, while the balance of external trade as a whole increased the economic performance by 4.8 percentage points.

The volume of (domestic) consumption expenditure of households realised on the territory of Hungary dropped by 2.4%. Broken down by durability groups, the volume of expenditure rose by 1.6% for durable goods, while it decreased in the remaining groups: by 6.0% in the case of non-durable goods, by 2.3% for semi-durable goods and by 0.1% among services.

As we wrote yesterday, a curious trend has emerged in the food industry: in many cases, Hungarian-produced food can be bought for a lower price in other European countries, like Germany. Pricing paradox: Hungarian food costs less abroad – here is why