Worst first-quarter growth data in Europe

Hungary’s 0.8% quarter-on-quarter GDP contraction in January-March was the sharpest drop in the entire bloc and the only country that fared worse than Hungary in terms of year-on-year growth was recession-ridden Greece, portfolio.hu quotes Eurostat.

With its 0.8% q/q contraction Hungary is the worst performer in the first quarter, followed by Greece with its economic output down by "only" 0.4% and Latvia (-0.1%). The latter two also presented a surprise to the downside, and Nordea has even pointed out that Poland recorded its fourth quarterly contraction in almost 15 years with GDP growth at -0.1%.

Slovakia and Romania are on top of the q/q ranking, having recorded 1.7% and 1.6% GDP growth in quarterly terms in Q1. Interestingly enough, all CEE countries were heavily drawing down EU funds from the previous fiscal cycle, but apparently this did not impact growth figures to the same extent.

One major factor in the fall in Hungary is that the volume of construction declined 6.3% month on month this March. Portfolio.hu says the massive fall is unexpected as the sector was apparently stabilising in February after its January freefall. "It seems so, though, that we have not yet seen the full impact of diminished EU funds as the year-on-year contraction, which has been around 20%, came in at 33.9%," the website points out.