Hungary’s GDP grew by an annual 8.2% in the first quarter, albeit from a low base, a first reading of data released by the Central Statistical Office (KSH) shows. Adjusted for calendar year and other effects, GDP rose by 8.0%.
In a quarter-on-quarter comparison, GDP climbed a seasonally and calendar year-adjusted 2.1%. KSH said “practically all branches of the national economy” contributed to the growth, but “mainly” industry and market services. Growth was “significant” in food and drink production, crude refining and electric equipment manufacturing, as well as in commerce, commercial accommodations, catering and logistics, it added. In a video message posted on Facebook after the release of the data, Finance Minister Mihály Varga said the Q1 growth rate showed the Hungarian economy had been “able to withstand crisis”.
“Government measures have successfully cushioned the impact of the Russian-Ukrainian war,” he added. He said “practically all sectors” contributed to Q1 growth and the industrial, construction and financial sectors “performed well”. “Retail and tourism could also strengthen thanks to high employment and wage rises,” he added. Hungary is still a “frontrunner” in terms of economic growth in the European Union, based on available data, he said. “But the effects of the war and sanctions pose risk to the growth of the Hungarian economy. We’re working to keep the economy on a secure growth path, we’re preserving stability and protecting results achieved until now,” he added.
Analysts told MTI that the low base a year earlier was a factor in the robust growth rate in the first quarter, and a slowdown was possible in the upcoming period.
Gergely Suppan of Magyar Bankholding said it was conceivable that Magyar Bankholding would up its growth forecast for the full year a notch to 5.9% in light of the Q1 figure, though a slowdown was expected in the coming quarters, with strained supply chains and a shortage of raw materials weighing on the back of the war in Ukraine and sanctions. Meanwhile, costs and lending rates are increasing while purchasing power is waning thanks to soaring inflation, he said. Suppan added that the biggest risk to growth would be an oil and gas embargo, though this was unlikely, he added, since Hungary would probably secure a temporary waiver.
Gábor Regős of Századvég said that growth in the first quarter was much higher than expected, driven by wage increases and government transfers as well as an uptick in services thanks to revived tourism, so the growth rate for the full year may be higher than initial expectations, and exceed 5%. The extent to which the war and inflation will hold back economic growth will become clearer in the coming quarters, he said.