Analysts see Hungary economy shrink over 1% in Q2

Hungary’s GDP dropped 0.1pc from the first quarter and fell by slightly more than 1pc yr/yr in the second quarter of 2012 according to analysts’ consensus published by the financial daily Napi Gazdasag on Monday. In Q1, Hungary’s GDP fell an unadjusted 0.7pc and a calendar-adjusted 1.2pc yr/yr and fell a seasonally- and calendar year-adjusted 1.2pc quarter-on-quarter.

They cited continued weak domestic demand, poor investment activity and a slowing demand on main external markets as reason for the contraction. Net exports are only tempering the contraction, they are insufficient to offset the continued drop of consumption and investments.

Most analysts revised down their Q2 growth estimates in the light of fresh industrial output data showing less than forecast expansion.The majority of the respondents did not project a pickup of investments this year. An agreement with the IMF/EU could give a boost to investment although it takes time to regain confidence. The analysts expect the positive effect of the new Mercedes plant, which started to turn out cars in the second quarter, to affect GDP data only gradually, from the end of 2012. The analysts forecast GDP to contract by 0.8pc-1pc this year after the 1.7pc GDP growth recorded in 2011.

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