Hungary’s first-quarter GDP grew by 5.3% annually, beating market estimates. This is the country’s second highest growth since 1996 as it was higher by a small margin last year. While the real GDP growth rate falls behind these numbers, it’s still considered one of the highest growths in Hungary and Europe in the past decade. Although this increase is exceptional, economic experts foresee a decrease later this year.
The Hungarian GDP (first estimate) grew by 5.3% in the first quarter of the year on an annual basis for raw data, according to the Central Statistical Office (KSH). Seasonal and calendar adjusted data show a 5.2% increase in the first three months of the year, beating market expectations of 5.1%. This means that the current growth is one of the highest yet.
Behind the numbers
As economic news site Portfolio points out, the Hungarian economy has three major strengths:
- Household consumption is supported by rapid wage increase and employment growth.
- Investments are supported by private demand, as well as EU funding which is at its max.
- Companies that have undergone capacity expansion and are producing for export can increase their shares in the external markets.
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The highest growth in the region yet
Economic growth also accelerated in the euro area and the European Union in the first quarter of the year compared to the previous quarter. Of the EU Member States, however, Hungary’s economy grew at the fastest pace quarterly and annually.
According to a recent estimate published by Eurostat, compared with the same quarter of the previous year, seasonally adjusted GDP rose by 1.2% in the eurozone and by 1.5% in the EU in the first quarter of 2019.
Hungary’s economy grew the most from January to March; it increased by 1.5% quarter-on-quarter and 5.2% year-on-year. With an annual GDP growth of 5.1%, Romania is in second. Meanwhile, Poland is third with 4.6%.
It’s important to mention that Eurostat’s country-by-country data set is rather incomplete. The first quarter figures for eight countries (Estonia, Ireland, Greece, Croatia, Luxembourg, Malta, Slovenia and Sweden) are not yet available. The full report will be released on 6 June.
Based on the factors behind the extensive growth of the GDP in Hungary, experts predict a slowdown later this year. This is mainly due to the following: wage increases are already a problem for many companies, labor reserves are falling, EU funds have been virtually allotted and the external environment has worsened since mid-2018.
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While this might be the most probable option, it wouldn’t be the first time economic experts have underestimated GDP growth and economic performance.
In the featured photo Minister of Finance Mihály Varga. Photo by Csaba Bús/MTI