Weak car and battery factories, big drought: the Hungarian economy in technical recession

According to KSH, without adjustments, GDP fell 0.8pc.

Services’ performance and the balance of product taxes and subsidies mitigated the decline by 0.8pp and 0.3pp, respectively. Industry contributed 1.1pp, agriculture 0.6pp, and the construction sector 0.2pp to the decline.

On the consumption side, investments contributed 2.1pp and the trade balance 0.9pp to the decline. Final consumption mitigated the drop by 2.1pp.

In a quarter-on-quarter comparison, GDP dropped a seasonally- and calendar year-adjusted 0.7pc.

In Q1-Q3, GDP rose an unadjusted 0.6pc and an adjusted 0.7pc.

Production approach

The industry reduced its performance by 4.4%, while manufacturing grew by 6.2% compared to the same period of the previous year. Among manufacturing branches, the largest contributors to the decrease were the manufacture of motor vehicles, trailers and semi-trailers and the manufacture of electrical equipment, while the manufacture of rubber and plastic products and the manufacture of food products, beverages and tobacco products slowed the fall in industry the most. The value added of construction was 4.0% and that of agriculture (as a consequence of the drought) 14.9% lower than in the corresponding period of the previous year.

The gross value added of services increased by 1.9% in total. The highest increase (5.9%) occurred in arts, recreation and other service activities. The value added of education was up by 3.8%, that of transportation and storage by 2.8% and the value added of information and communication by 2.6%. The performance of both accommodation and food service activities and financial and insurance activities increased by 2.4%. The value added of human health and social work activities grew by 2.3% and that of real estate activities by 1.2%. The performance of professional, scientific, technical and administrative activities became 0.9%, that of wholesale and retail trade 0.8% and the performance of public administration 0.4% larger.

The 0.8% decrease in gross domestic product in the 3rd quarter of 2024 was reduced by services (by 0.8 percentage point) and the balance of taxes and subsidies on products (by 0.3 percentage point). Industry lowered the performance of the economy by 1.1, agriculture by 0.6 and construction by 0.2 percentage point. Within services, all sections contributed to a similar extent to offsetting the decrease in GDP.

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Expenditure approach

The actual final consumption of households was up by 4.2% 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, rose by 4.5%. The (domestic) consumption expenditure of households realised on the territory of Hungary became 4.1% higher. The volume of domestic consumption expenditure increased in all durability groups: by 1.6% in the case of durable goods, by 4.6% for semi-durable goods, by 4.8% in the case of non-durable goods and by 4.0% for services.

The volume of social transfers in kind from the government went up by 3.3%, while that of the actual final consumption of the government diminished by 1.4%. The volume of social transfers in kind from non-profit institutions serving households (NPISHs) grew by 1.2%.

As a result of the above trends, actual final consumption increased by 3.2%.

Gross fixed capital formation fell by 14.0% in the 3rd quarter compared to the corresponding period of the previous year. Both the volume of investments in construction and that of investments in machinery and equipment went down.

Gross capital formation decreased by 4.9% 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 grew by 0.3% in the 3rd quarter.

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