Hungary's First Quarter GDP Climbs 1.7%

Hungary's GDP rose 1.7% in the first quarter from the same period a year earlier, the Central Statistical Office (KSH) confirmed in a second reading of data released on Tuesday.

Growth was the same when adjusted for seasonal and calendar year effects.

Services lifted headline GDP growth by 1.4 percentage points, including a 0.5 percentage points contribution by professional, scientific, technical and administrative activities, while industry added 0.2 percentage points and the balance of taxes and subsidies on products 0.3 percentage points to growth. The impact of the farm sector on growth was neutral and the construction sector shaved 0.1 percentage points off growth.

On the consumption side, final consumption contributed 3.8 percentage points to GDP and gross capital formation added 2.4 percentage points, but the trade balance dragged the headline figure down by 4.5 percentage points.

In a quarter-on-quarter comparison, seasonally- and calendar year-adjusted GDP rose 0.8%.

In a comment on the fresh data, ING Bank chief economist Peter Virovacz said services may have been boosted by technical activities linked to the Home Start subsidised lending scheme for first-time home buyers and to marketing and research ahead of the April elections. He added that quarter-on-quarter growth of gross capital formation was driven by an increase of inventories, as new industrial capacity geared up, while investments stagnated.

ING Bank puts full-year GDP growth at 1.5%, driven by consumption and modest investment growth, while energy prices and the trade balance weigh.