Hungary GDP Growth Slowed in Second Quarter, Survey ShowsZoltan Simon
Hungary’s economy probably lost steam in the second quarter after exiting a 2012 recession, raising pressure on Prime Minister Viktor Orban before parliamentary elections next year.
Gross domestic product advanced 0.3 percent from the previous three months after rising 0.7 percent in the first quarter, according to the median estimate of five economists in a Bloomberg survey. It grew 0.6 percent from a year earlier, a separate poll of eight economists showed. The statistics office will report preliminary data at 9 a.m. tomorrow in Budapest.
Economic growth may exceed the government’s 0.7 percent forecast for this year, Orban said June 14, with the cabinet estimating accelerating expansion in the second half. Its prospects may be helped by euro area demand, with the currency bloc’s growth projected to snap six quarters of contraction in the three months ended June, according to a Bloomberg News survey. Euro-area GDP data will be published tomorrow.
“The favorable data from the euro area and Germany appear to underpin the hypothesis that the recovery will start in” Hungary’s “main export markets in the second half of the year,” Mariann Trippon, a Budapest-based economist at Intesa Sanpaolo SpA, said in an e-mailed report. “Monthly data all point in the direction of Hungary having exited the recession.”
Hungary’s forint has lost 1.9 percent against the euro this year, the sixth-best performer among emerging-market currencies tracked by Bloomberg. It had weakened 0.3 percent to 297.14 against the common currency late yesterday in Budapest.
Orban sacrificed growth in his first two years in office to keep the budget deficit within the European Union’s 3 percent of GDP limit and remove the threat of cuts in funding from the trading bloc. Measures included Europe’s highest bank tax and extraordinary corporate levies on industries such as energy, damaging lending, industrial production and investment.
Industrial production, Hungary’s economic engine, expanded a workday-adjusted 1.7 percent from a year earlier in June as car company production rose. Daimler AG’s Mercedes-Benz, Volkswagen AG’s Audi AG, Suzuki Motor Corp and General Motors Co.’s Opel unit are among car manufacturers in Hungary.
The central bank in June began a 750 billion forint ($3.4 billion) Funding for Growth program, giving free funding to commercial banks that boost lending to small and medium-sized companies.
The funding plan complements 12 consecutive quarter-point cuts in the benchmark interest rate to a record-low 4 percent. The central bank has said it plans to reduce the rate further, by as much as 1 percentage point.