Hungary’s economy shrank by an annual 3.6 percent in the fourth quarter of 2020, slowing from a 4.6 percent decline in Q3, the Central Statistical Office (KSH) said in a second reading of data on Tuesday.
The drop was revised up from 3.7 percent in a first reading of the data released on February 16.
Adjusted for seasonal and working-day effects, GDP fell by 4.1 percent.
For the full year, GDP dropped by 5 percent.
In a quarter-on-quarter comparison, adjusted for seasonal and workday effects, GDP rose by 1.4 percent, revised up from 1.1 percent in the first reading.
On the production side, services continued to be the biggest drag on growth, accounting for 3.2 percentage points of the headline decline in Q4.
Output of commerce edged up 0.1 percent in Q4, while output of commercial accommodations and catering plunged 51.1 percent as second-wave restrictions came into force. The information technology sector’s output climbed 6.3 percent and output of the financial and insurance sector grew 3.3 percent.
Finance Minister: Hungarian Economy More Resilient than EU average
Commenting on the data, Finance Minister Mihály Varga said the Hungarian economy was more resilient than that of Europe as a whole, and bounced back faster than after the crisis in 2008.
Thanks to “the past decade’s work”, the crisis found Hungary much stronger than it was in 2008, Varga said on Facebook. Also, the government chose to handle this crisis with tax cuts, job creation and investment support rather than austerity measures, he said. The action plan to re-start the economy is expected to bring about growth of 4.5 percent this year, he said.
Analysts optimistic for 2021
Analysts said the data promised significant rebound potential and possibly faster growth in 2021 than was originally estimated.
Péter Virovácz of ING Bank expected growth of 5.4 percent in 2021. With such rebound, the economy may recover losses incurred during the pandemic by the end of 2021, he said.
Gábor Regős of pro-government Századvég Gazdaságkutató said growth may even surpass 5 percent if restrictions were lifted swiftly. If pandemic-related restrictions stayed in place for a longer period, “the consequences may be incalculable”, he added.
Featured photo illustration by Sándor Ujvári/MTI