Hungary’s Economy Grows More Than Forecast in Broad-Based Pickup

  • Services, industries, agriculture carried growth last quarter
  • Second-quarter uptick follows decline in first three months

Hungary’s economy rebounded as a broad-based expansion bolstered government optimism after an unexpected quarterly contraction at the start of the year.

Gross domestic production grew 2.6 percent from a year earlier in the second quarter, following 0.9 percent expansion in the previous three months, the Budapest-based statistics office said Friday, citing preliminary data. The median of 17 estimates in a Bloomberg survey was for 1.9 percent growth. GDP expanded 1.1 percent from the first quarter, compared with a revised 0.7 percent drop in the first three months.

Hungary’s economic rebound was fueled by services, industrial output and agriculture, according to the statistics office, outweighing a drop in construction, as European Union funding that had financed public works projects dried up. The pace of growth heartened the government, which had stuck to its 2.5 percent expansion forecast for the full year even after the dip in the first quarter.

“The data show that Hungary’s economic momentum continues,” Economy Minister Mihaly Varga told reporters in Budapest after the data release. “We have high hopes that this dynamism will be even stronger in the second half of the year” as consumption drives growth.

The forint was little changed at 310.03 per euro at 9:17 a.m. in Budapest. A second reading of economic growth figures is due on Sept. 6.

Hungarians have more money to spend as record-low unemployment, deflation and the exodus of hundreds of thousands in recent years to western Europe has produced a labor shortage, driving up wages across the economy. The average salary grew 6.8 percent in the first five months of 2016 from a year earlier, including a 10.6 percent increase in the public sector, according to statistics office data that excludes wages paid to people employed on public works.

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