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.
Auspicious processes which have lately emerged will also have a stimulating impact on the labour market. As the labour market tends to react to economic processes after a period of six months-one year, the employment capacity of the private sector is anticipated to increase after the end of this year, boosting the number of people in employment and decreasing the number of the jobless.
On the basis of data available thus far, it appears increasingly certain that Hungarian economic growth will accelerate to close to 2.5 percent in the fourth quarter which will mean that for the entire year of 2013 growth will reach or – provided favourable economic processes persist – even surpass 1 percent.
Ministry for National Economy