Hungary’s economy shrank by 4.6% in the third quarter, according unadjusted data, the Central Statistical Office (KSH) said. GDP fell by 4.7% in Q3 based on seasonally and calendar-adjusted data. The recovery from the economic effects of the epidemic started in the third quarter, with GDP up 11.3% from the second quarter, according to seasonally and calendar-adjusted data, with most sectors of the economy growing. In the first three quarters, GDP fell by an annual 5.6%, based on unadjusted data.
Commenting on the data, the Finance Ministry said the government’s economic protection measures had been successful in restarting the economy after the first wave of the coronavirus epidemic. The better-than-expected growth rate “shows that the government is correct in carrying on with its economic policy based on tax cuts and job protection” in the second wave of the epidemic, the ministry said in a statement. The third-quarter growth rate indicates that, even after a lockdown that lasted almost throughout the spring, the economy was able to rebound quickly, it added. Growth was mainly driven by the infocommunications and financial services sectors in the period and spurred on by a jump in home loans, given a boost by the government’s home creation scheme, the statement said. Industrial output reached its low point in April before going on to recover, exceeding last year’s figures by September. The statement also highlighted the rebound of the domestic tourism sector during the summer, noting that foreign tourist arrivals had also started rising again before Hungary closed its borders in September. The ministry said Hungary’s Q3 GDP growth rate was expected to exceed those of Germany and Austria, adding that the economy could again make a quick recovery after the November lockdown. It said a contraction of 6.4% of GDP projected for this year could be followed by a growth rate of 3.5% in 2021.
Analysts told MTI that the third-quarter GDP figure had outperformed expectations but risks lay ahead in the fourth quarter. Gergely Suppan, lead analyst at Takarékbank, said another downturn was unavoidable due to the heavy second wave of the coronavirus pandemic, and so Takarékbank now expects annual GDP to shrink by 5.4% as opposed to its earlier expectation of 4.7%. Péter Virovácz of ING Bank told MTI the strong rebound in the third quarter did not mean Hungary was out of the woods, with GDP still 4.6% lower than a year earlier and new restrictions and shutdowns weighing down the fourth quarter. Dávid Németh of K&H Bank said GDP would largely depend on availability of additional measures that have an impact on production, services and demand. One question concerns how many businesses and consumers will postpone big-ticket purchases, he added.