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Hungary’s economic output shrank by an annual 13.6% in the second quarter this year, with industry and services contracting sharply due to the pandemic, according to a second reading of the data published by the Central Statistical Office (KSH). Adjusted for seasonal and workday effects, GDP fell by 13.5% in Q2. In a quarter-on-quarter comparison, GDP was down an adjusted 14.5%. For the first half, GDP declined by an unadjusted 6.1%. KSH said the contribution of services to the year-on-year GDP decline was 6.8 percentage points. Industry contributed 4.3 percentage points to the drop and the construction sector 0.7 of a percentage point.
On the production side, gross added value in the industrial sector dropped 20.1% and the construction sector contracted by 13.2%. Services declined by 12.2% as the commerce, commercial accommodations and catering sector contracted by 12.6% and the ICT sector shrank 1.8%. The public administration, education, health-care and social services sector contracted by 13.0%. On the expenditure side, actual final consumption of households fell by 8.6% and gross fixed capital formation dropped 13.5%. KSH said actual final consumption contributed 4.5 percentage points to the headline decline and gross fixed capital formation 1.4 percentage points. The trade balance contributed 7.7 percentage points to the economic contraction.
ING Bank chief analyst Péter Virovácz said the detailed data show a better chance of a speedier recovery as they indicate the industrial sector is finding its footing, net exports are improving at a faster clip, and consumption is declining less than expected. ING is standing by its projection for a 5.5% full-year economic contraction, at least until July industrial output data are released later in the week, he added. K&H Bank senior analyst Dávid Németh said a pick-up in the industrial sector and in domestic tourism would support an improvement in GDP data for Q3. He put the full-year decline in GDP at around 6%.