Hungary’s economic output declined by an annual 2.1 percent in the first quarter, the Central Statistical Office (KSH) said in a second reading of data on Tuesday.
The decline was revised up from a 2.3 percent drop in a first reading published on May 18.
The scale of the contraction was the smallest since the start of the coronavirus crisis. Hungary’s annual GDP has declined every quarter since Q2 2020.
In a quarter-on-quarter comparison, GDP rose a seasonally and calendar year-adjusted 2 percent, revised up from 1.9 percent in the first reading.
Better-than-expected data surprises analysts
Commenting on the data, Péter Virovácz of ING Bank said KSH’s second reading had “added to the surprise” caused by recent trends. Despite stringent pandemic-related measures, consumption hardly slowed in the first quarter, Virovácz noted.
While output overall slowed further, exports of goods and services expanded, he said. Production grew in almost all sectors too, with industrial and construction output both exceeding expectations, Virovácz said.
The service sector grew at a surprising pace given restrictions, with warehousing, information, communication and scientific activities driving the growth, he said, adding that growth was expected to pick up in the coming months as the restrictions are lifted, with 2 percent growth, or even more, expected in the second quarter. ING expects a 7.4 percent growth in the full year of 2021, he said.
Gábor Regős of pro-government Századvég Gazdaságkutató noted that the hospitality industry and logistics and warehousing continued to suffer from pandemic-related restrictions. He said the next quarter is expected to bring growth both in annual and monthly comparison, partly because of a low base due to the restrictions. Annual growth is expected at or above 5 percent, he said, warning that the pandemic continued to pose a risk.
Chief K and H analyst Dávid Németh said the upward revision in KSH’s second reading was unexpected and showed that the Hungarian economy was still catching up with its peers. GDP may grow by as much as 6 percent this year, he said.
Featured photo illustration by Boglárka Bodnár/MTI