Hungarian GDP Climbs 1.7% in Q1

Hungary's GDP rose 1.7% in the first quarter from the same period a year earlier, a first reading of data released by the Central Statistics Office (KSH) on Thursday shows.

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

Growth was driven mainly by services, especially professional, scientific, technical and administrative activities, KSH said. Industry also contributed to growth after a long period of weighing on GDP, it added.

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

ING Bank chief analyst Péter Virovácz called the fresh data a "positive surprise", but said services' contribution to growth was expected. He added that growth in technical services may have been supported by residential developments launched with the Home Start subsidized credit scheme for first-time home buyers.

Erste Bank macro analyst János Nagy said economic activity could benefit as political uncertainty resolved. The positive contribution of industry to headline growth indicates a "massive rebound" in industrial output in March, he added. The analyst also said that growth may also have been lifted by government welfare measures ahead of the election.

Looking ahead, he pointed to the positive impact of local battery manufacturing capacity expanding in the second half of the year as well as the possible release of Hungary's frozen European Union funding.