Hungarian economic performance beats expectations

According to preliminary data by the Hungarian Central Statistical Office (KSH), in the third quarter of 2013 – well above prior analyst estimates – Hungary’s economy expanded by 1.7 percent year-on-year. In light of data adjusted for seasonal and calendar effects, annual growth totalled 1.6 percent. In light of statistics of diverse fields, economic growth has been based on an increasingly sound structure.

While in previous quarters the Hungarian economy had been exclusively driven by exports, as of the second quarter of this year domestic demand has been contributing more and more to expansion. Within that, investment growth is thought to have been boosted mainly by more intensive utilization of EU funds, thus the investment rate has been improving again after it had declined for several years.

Low inflation, higher incomes in real terms and better consumer confidence have provided impetus to consumption, as retail sales data are also indicating. On the basis of these two factors it can be concluded that domestic demand is now underpinned by two elements as consumption and investment have both bolstered growth.

It has to be emphasised that the Hungarian economy has been achieving significant growth while it has maintained a positive external trade balance and even managed to improve current account surplus in comparison to the previous year. This fact confirms the assumption that the sounder growth structure is sustainable also in the long term. Favourable growth data are also expected to exert a positive influence on fiscal revenues over the coming months.