Hungary Growth Accelerates More Than Forecast in 3rd QuarterZoltan Simon
Hungary’s economy accelerated more than analysts forecast in the third quarter, boosting annual growth to the fastest pace in more than two years as Prime Minister Viktor Orban prepares for elections.
Gross domestic product rose 0.8 percent from April-June after a revised 0.4 percent in the second quarter, the statistics office in Budapest said today. The median estimate of 11 economists in a Bloomberg survey was 0.4 percent. GDP rose 1.7 percent from a year earlier, compared with the 0.8 percent median forecast.
Orban, whose party leads opinion polls before elections in the second quarter of next year, is seeking to fortify a recovery from last year’s recession while keeping the budget deficit within the European Union limit of 3 percent of GDP. Growth may exceed 1 percent in 2013, the government said today.
“The end of the year may bring a further spectacular jump, since we registered a substantial contraction in the final three months of last year,” Andras Balatoni, an economist at ING Groep NV’s Budapest-based unit, said in an e-mail.
The forint rose 0.3 percent to 298.2 per euro as of 10:30 a.m. in Budapest. It has been the sixth-most resilient of 24 emerging-market currencies tracked by Bloomberg, dropping 2.3 percent against the euro. The benchmark BUX stock index rose 2.1 percent to 18,827.03, snapping a three-day decline.
Growth may accelerate to 2.5 percent in the fourth quarter, Hungary’s Economy Ministry said in an e-mail today. The government forecasts 2 percent growth for next year.
Rising domestic consumption and the “more intensive” use of EU funds for investments helped boost growth in the third quarter, the Economy Ministry said. Car production helped lift industrial output in the quarter, statistician Balint Murai told reporters today.
“Growth is basically a result of the extraordinary performance of agriculture, industry and construction, or basically the production sectors,” the ministry said.
The Hungarian central bank has lowered borrowing costs for 15 consecutive months, cutting the benchmark by more than half to a record-low 3.4 percent in October to buoy the recovery. The bank is also providing 2.75 trillion forint ($12 billion) in interest-free loans to commercial lenders to boost credit to small and medium-sized companies.
Orban has pinned his economic policies on the introduction of a 16 percent flat personal-income tax, which failed to avert a recession last year while causing fiscal revenue to drop. The cabinet has relied on extraordinary industry taxes from banking to energy to plug budget holes.
Hungary’s credit rating was affirmed at non-investment grade with a negative outlook by Standard & Poor’s, which for its Oct. 25 decision cited the country’s “weak” growth prospects and high debt level for its decision. The government debt level was 81.1 percent of GDP through the second quarter, the highest among eastern EU members.