There are both positives and negatives in the new Hungarian certificate

What happened on both sides?

Dávid Németh, senior analyst at K&H, said: “As expected from the previously published monthly data, on the production side, industry was the biggest drag on the economy’s performance in the second quarter compared to a year earlier. The poor performance of agriculture is also not surprising. At the same time, the construction industry was able to make a positive contribution to the GDP figure after a year. And it is mainly thanks to services that GDP has just rebounded from negative territory to positive territory.” He added: “Significant differences are visible within the service sector. The persistently weak industrial performance also plays a role in the negative result of the transport and warehousing subsector within services. In addition, real estate transactions have not been able to find their footing since the beginning of 2024. However, a turnaround is expected in the latter subsector in the third and fourth quarters of this year as a result of the housing market recovery. In the service sector, the largest growth was achieved by information and communication, as well as art, leisure and entertainment; and accommodation and catering. The latter two subsectors can also thank the increase in real wages, increasing household consumption and the recovery in tourism for their strengthening,” he added.

These figures are reflected on the demand side of GDP, as household consumption contributed 3.7 percentage points to the second-quarter growth. “The small decline in investments was not surprising, as corporate lending was restrained. However, the much more pronounced deterioration in net exports than expected is surprising,” said Dávid Németh.

What can we expect?

“Regarding the future, real wage growth for the population is considered a stable point, which is why consumption continues to support the economy. In the area of ​​investments, we expect a turnaround, that is, that they will finally move into positive territory after about three years. This may be partly helped by the completion and handover of government projects and developments related to larger foreign companies,”

the analyst said.

On the supply side, services may continue to play the main role, while industry and agriculture may show stable positive results in the first half of next year. Overall, Dávid Németh expects annual GDP growth of 0.6 percent this year, which may accelerate to around 2.4 percent next year. The improvement may be partly due to the low base. In addition, the start-up of factories built through the already mentioned major projects will also stimulate the economy.