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GDP rebounds from low pandemic base

Hungary's second-quarter GDP grew by 17.9 percent year-on-year, after a double-digit decline in the base period, the Central Statistical Office (KSH) confirmed in a second reading of data released on Wednesday.

Adjusted for seasonal and calendar year effects, GDP climbed 17.7 percent.

In a quarter-on-quarter comparison, GDP rose a seasonally and calendar year-adjusted 2.7 percent.

KSH noted that unadjusted GDP was 2.2 percent higher than in Q2 2019, before the start of the pandemic.

On the production side, industry contributed 7.3 percentage points to the Q2 headline increase, services 7.0 percentage points and the construction sector 0.9 percentage point. Within services, commerce, vehicle repair and the commercial accommodations and catering sectors accounted for 2.2 percentage points of the increase.

Output of industry jumped 36.9 percent during the period, while output of services climbed 12.4 percent and construction output increased by 18.4 percent. Within services, output of the commercial accommodations and catering segment rose by 71.5 percent.

On the expenditure side, final consumption contributed 6.0 percentage points and gross capital formation 5.4 percentage points to the headline increase. The trade balance lifted GDP by 6.5 percentage points.

Final consumption increased by 8.1 percent, while gross capital formation rose by 8.3 percent during the period.

KSH noted that in a quarter-on-quarter comparison, gross added value rose by 2.8 percent in the industrial sector, 3.6 percent in construction and 1.8 percent for services. On the expenditure side, household consumption increased by 1.7 percent, while public consumption fell 2.3 percent. Gross fixed capital formation grew 3.2 percent.

ING Bank chief analyst Peter Virovacz said the data show the structure of production-side growth was “relatively balanced”, while services and household consumption drove growth on the expenditure side. He augured quarter-on-quarter growth of 1.0-1.5 percent in Q3, supported by a pick-up in expenditures on services during the summer months, and put full-year growth over 7.0 percent and possibly as high as 8 percent if the fourth wave does not impact the economy.

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