- GDP expanded 2.3% in July-September, slowest in nine quarters
- Stagnant construction output adds to challenges to economy
Hungary’s economy expanded at the weakest pace in nine quarters as agricultural production dropped and construction output stagnated, underscoring risks to the government’s ability to maintain the country’s growth momentum.
Gross domestic production rose 2.3 percent in the July-September period from a year earlier, the slowest pace since the second quarter of 2013, the Budapest-based statistics office said in a preliminary report on Friday. The median of 12 estimates in a Bloomberg survey was for a 2.5 percent gain. The economy grew 0.5 percent from the second quarter.
“Agriculture output dropped, construction stagnated while manufacturing output-growth slowed compared with the year-ago period,” statistician Zsuzsanna Boros told reporters in Budapest.
Hungary’s government and the central bank are working to ward off a projected economic slowdown as European Union funding, the main source of investment in the eastern EU nation, will drop from 2016. The planned steps include giving banks incentives to boost lending and targeted tax cuts for certain industries.
The forint erased its gains after the data release and was down 0.1 percent at 312.82 against the euro at 9:21 a.m. in Budapest. The currency has strengthened 1.2 percent this year.
Hungary’s economy expanded 3.7 percent last year, the third-fastest pace in the EU after Ireland and Luxembourg, driven by car manufacturing. Last week, the EU executive forecast that Hungarian growth will slow to 2.9 percent this year and 2.2 percent in 2016.