Full year GDP decline expected to be 6 percent

On the production side, services accounted for 2.2 percentage points of the headline decline. The construction sector accounted for 1.0 percentage point of the drop and the industrial sector for 0.4 percentage point.

Within services, output of the hotel and catering sector plunged by 20.9 percent as the pandemic impacted tourism, and logistics output dropped by 19.9 percent, but output of the ICT sector rose by 5.3 percent.

Analysts told MTI that whereas the economy contracted by 5.5 percent in the first three quarters, the fourth quarter outlook was shakier, and it was likely that the full-year decline would be around 6 percent. The government expects GDP to shrink by 6.4 percent in the fourth quarter.

David Nemeth of K and H Bank said that based on the current outlook, the Hungarian economy was likely the show negative growth of 6 percent this year, before bouncing back to an annual 3.5-4 percent positive growth rate in 2021.

Peter Virovacz of ING Bank forecasted a recession of 5.8 percent for the full year, while he said the economy as a whole may recover by mid-2022, though not all sectors will stage a uniform recovery, he added.

Gabor Regos of Szazadveg Research noted the decline in GDP in the third quarter was less than in the preceding quarter, suggesting the economy was starting to turn the corner. Based on the coronavirus restrictions already in place, the contraction this year is likely at around 6 percent though any further restrictions may cause an even bigger decline, he added.