GDP increases slightly in the second quarter

Economy continues to struggle in Q2: According to a preliminary estimate, GDP ticked up by 0.1% in the second quarter on an annual basis, improving marginally from the first quarter’s flat reading. On a seasonally adjusted quarter-on-quarter basis, economic activity rebounded 0.4% in Q2, compared to the previous quarter's 0.1% decrease.

Industry and agriculture drag on economic growth: Services activity contributed to economic growth, but this was not enough to compensate for the weak performances of the agriculture and industry sectors, curbed by global trade turmoil, a poor performance of Germany’s economy—Hungary’s main trading partner—and a protracted drought. A detailed breakdown will be released on 2 September.

Economic growth to remain subdued this year: Looking ahead, our panelists expect the economy to grow at a faster annual pace in the remaining two quarters of the year. Still, GDP growth will remain lackluster this year as a whole as private consumption growth moderates and fixed investment contracts for the third year running due to elevated interest rates and domestic political instability. In addition, while exports are forecast to rebound this year, they remain exposed to downside risks from the impact of U.S. tariffs on the EU.

Panelist insight: Commenting on the outlook, Erste Bank’s Orsolya Nyeste said: “The overall picture is showing that the continued stagnation has not yet improved. Better performance would be needed in the second half of the year to achieve the 0.8% full-year GDP growth we are currently forecasting. However, risks (negative effects of the trade war, loosening labor market) still tend to point downwards. The big question for the period ahead is to which extent the various targeted pre-election measures of the government will be able to offset these negative risks.”

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Hungarian exports projections for the next ten years from a panel of 18 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable exports forecast available for Hungarian exports.

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