Hungary’s GDP grew by an annual 3.2 percent in the second quarter, slowing from 4.2 percent in Q1, the Central Statistical Office (KSH) said in the first reading of data on Wednesday.
Market-based services contributed the most to growth in Q2, the KSH said.
Adjusted for calendar year effects, GDP rose by 3.8 percent in Q2, slowing down slightly from 3.9 percent in Q1.
In a quarterly comparison, GDP rose by 0.9 percent in Q2, slowing from 1.4 percent in Q1.
First-half GDP growth was up an unadjusted 3.7 percent annually.
The rate of economic expansion in the second quarter was in line with expectations, the Economy Ministry said. In the second half of the year, the growth rate is expected to pick up further on the back of the effects of European Union funding projects, the government’s home-creation scheme, the deal over six-year wage hikes and tax cuts, the ministry added in a statement.
In the same period last year, the economy grew at its strongest pace for a long time, so the slight slowdown could be expected, the statement said. For the full year, the government’s target of GDP growth of 4.1 percent appears achievable.
Growth is sustainable and the country’s external financing capacity continues to be “outstanding”, while its external debt is on a declining course, the ministry said.
Commenting on the data, ING analyst Péter Virovácz said the annual 3.2 percent growth was below the market’s expectations of 3.6 percent. He said slowing growth rates in a quarterly comparison were expected. He estimated the growth to reach 4 percent in the remaining two quarters and full-year growth at 3.9 percent.
Dávid Németh of K and H said the slowdown came off the back of last year’s vigorous growth and was also due to a weaker industry output. Németh forecast an annual growth of 3.9 percent.
Gergely Suppán of Takarékbank noted that there were three less working days in the first half of the year than in the same period in 2016, so the decline in growth was largely due to the calendar-year effect. The economy was characterised by weaker agricultural and industrial output coupled with the strong performance of market services, he said.