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Hungarian Economy Bounces Back in Third Quarter

Balázs Frei 2020.12.02.

The Hungarian economy did better than expected in Q3, bouncing back 11.4% compared to the previous quarter.

In the first three quarters overall, economic output fell around 5.5%. Year-on-year, GDP was down 4.6% in Q3. Almost half of this came from the service sector, more than a fifth was due to declining output in the construction sector, while industry was responsible for less than a tenth of the reduction.

Within services, the hospitality sector’s output plunged by 20.9% as the pandemic impacted tourism, and logistics output dropped by 19.9%. Information and Communication Technology output rose by 5.3%.

Employment Down by 0.8% in August-October
Employment Down by 0.8% in August-October

The three-month rolling employment figure in August-October was down 0.8 percent at 4,482,000 from the same period a year earlier, the Central Statistical Office (KSH) said on Friday. In the 15-64 age group, 4,402,000 were considered employed, an employment rate of 70.2 percent. In October, the average monthly number of employees was 4,451,000, 31,000 less […]Continue reading

According to analysts, while the economy contracted by 5.5% in the first three quarters, outlooks for the fourth quarter look more dubious. It is therefore likely that the fall in GDP would be around 6 percent for 2020 as a whole. The government expects GDP to shrink by 6.4 percent in the fourth quarter, which now may seem a little pessimistic.

Dávid Németh of K&H Bank said that based on current trends, the Hungarian economy was likely to show negative growth of 6% this year, and will bounce back to an annual growth rate of 3.5-4% in 2021.

Péter Virovácz of ING forecast a recession of 5.8% for the full year. He said the economy as a whole may recover by mid-2022, though this will not be uniformly true across sectors.

Investment Volume Falls by 12% in Q3
Investment Volume Falls by 12% in Q3

Investment volume in Hungary fell by an annual 12.0 percent in the third quarter of 2020, the Central Statistical Office (KSH) said on Thursday. In a quarter-on-quarter comparison, investment volume fell by a seasonally-adjusted 2.1 percent. Investment volume fell in most economic sectors but jumped by 98.4 percent in health care due to pandemic-related spending, […]Continue reading

Gábor Regős of the pro-government Századvég Research Institute noted that the fall in GDP in the third quarter was less than in the preceding quarter. This suggests that the economy has started to round the bend. Based on the coronavirus restrictions already in place, the contraction this year will likely be around 6%, though any further restrictions may cause an even bigger decline, he added.

Feaured photo illustration by Zoltán Balogh/MTI