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Hungarian economy expands 7.1 percent in 2021, KSH confirms

Hungary's GDP grew by an annual 7.1 percent in the fourth quarter, bringing full-year growth to 7.1 percent, too, the Central Statistical Office (KSH) said in a second reading of data on Wednesday.

The Q4 figure was revised downward from 7.2 percent in the first reading released on February 15, but full-year growth was unchanged.

KSH noted that full-year GDP was up 2.1 percent compared with 2019, the year before the coronavirus crisis.

Adjusted for seasonal and calendar year effects, fourth-quarter GDP rose by an annual 7.0 percent. In a quarter-on-quarter comparison, adjusted GDP rose by 2.0 percent.

On the production side, services added 4.6 percentage points to fourth-quarter headline growth, the construction sector 1.2 percentage point and industry 0.4 percentage point.

Industrial output – likely hit by supply-chain interruptions – rose by 2.1 percent during the period, while output of services climbed by 8.1 percent and construction output increased by 21.4 percent. Within services, output of the commercial accommodations and catering segment jumped by 68.8 percent, rebounding with the lifting of pandemic restrictions.

On the expenditure side, final consumption contributed 4.8 percentage points to growth, while gross capital formation added 1.6 percentage points. The trade balance contributed 0.8 percentage point to growth.

Final consumption increased by 6.8 percent, while gross capital formation rose by 3.3 percent during the period.

For the full year, services added 3.6 percentage points, industry 1.9 percentage points and the construction sector 0.7 percentage point to headline growth on the production side. On the expenditure side, final consumption contributed 3.1 percentage point, gross capital formation 2.4 percentage points and the trade balance 1.7 percentage points.

ING Bank chief analyst Peter Virovacz said Q4 growth was supported by an “extraordinarily strong” performance in the construction sector, while the industrial sector did “surprisingly well” in spite of shortages and supply chain interruptions, boosting exports. Whether that dynamic growth can be maintained is “a big question”, he added, pointing to the impact of the war in Ukraine on supply chains. ING has knocked down its forecast for 2022 GDP growth to 5.7 percent from 6.2 percent, with “strong downside risks”, he said.

K+H senior analyst David Nemeth said the base effect played “a big role” in last year’s marked growth and put this year’s GDP growth around 5.5 percent, although noting risks posed by the war in Ukraine, higher inflation and the coronavirus pandemic.

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