Economy
INSTANT VIEW - Hungary Q3 GDP disappoints (2)
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(Adds comments by Takarékban, Goldman Sachs on page2)
Hungary's gross domestic product grew by 0.3% quarter on quarter in Q3 2007, according to seasonally adjusted first estimate figures released by the Central Statistics Office (KSH) on Friday. The KSH has also pruned the Q2 “growth" figure to zero from +0.1%.
“The breakdown shows that household demand in fact slightly improved on yr/yr terms in Q3. It fell only by 2% yr/yr after a 3.2% yr/yr registered in Q2. Although it was mainly driven by basis effects the q/q seasonally adjusted figure also improved a little bit (neg.0.2% q/q after neg.0.7% q/q). Gross fixed capital formation (investment) declined by 1.8% yr/yr after a 0.8% yr/yr growth registered in Q2."
“The main surprise in the data was a big surge in real import growth (the 5.9% q/q sa adjusted growth there in fact was the strongest figure since Q1 2006)."
“Following a conversation with the stats office, we put this down to strong demand for services from abroad (services imports on the current account). This very high real import growth print means on balance we see the data as slightly negative on an underlying basis, and also see some risk that the Q3 C/A deficit is worse than expected because of the services account."
Eszter Gárgyán, Citibank, Budapest
“Seasonally adjusted QoQ growth accelerated to 0.3% from 0.0% in Q2, which is the only positive trend in the GDP, indicating that growth has bottomed out in Q3. Household and public consumption continued to contract, but the quarterly drop moderated to 0.2% in Q3 to 0.3% in Q2, suggesting a slow recovery is likely to follow in the coming quarters."
“The pick up in services from 1.0%QoQ in Q2 to 1.3%QoQ in Q3 is also an encouraging sign for consumption growth prospects but, given falling consumer confidence, we expect only a slow recovery in household consumption in 2008, supported by the positive net real wage growth."
“Weak investment activity suggests that growth is unlikely to return to 4% by 2009, as the government assumes. Construction output continued to contract sharply, and we do not expect this trend to change in 2008 either."
“Net exports contributed less to growth in Q3 as an unexpected surge in imports narrowed the positive gap of exports and imports. Since the trade data did not show an increase in imports, this is likely to be related to higher levels of services imports, which will add to the current account deficit in Q3."
“October trade data point to exports remaining strong in Q4, and we not expect a deceleration in exports until 2008. The downside risks to Euro-zone growth outlook look to pose risks to the contribution of net exports to growth. We have lowered our growth projection to 2.6% from 2.8% for 2008.
Hungary's gross domestic product grew by 0.3% quarter on quarter in Q3 2007, according to seasonally adjusted first estimate figures released by the Central Statistics Office (KSH) on Friday. The KSH has also pruned the Q2 “growth" figure to zero from +0.1%.
UniCredit, Citibank.
Gyula Tóth, UniCredit, Vienna “The breakdown shows that household demand in fact slightly improved on yr/yr terms in Q3. It fell only by 2% yr/yr after a 3.2% yr/yr registered in Q2. Although it was mainly driven by basis effects the q/q seasonally adjusted figure also improved a little bit (neg.0.2% q/q after neg.0.7% q/q). Gross fixed capital formation (investment) declined by 1.8% yr/yr after a 0.8% yr/yr growth registered in Q2."
“The main surprise in the data was a big surge in real import growth (the 5.9% q/q sa adjusted growth there in fact was the strongest figure since Q1 2006)."
“Following a conversation with the stats office, we put this down to strong demand for services from abroad (services imports on the current account). This very high real import growth print means on balance we see the data as slightly negative on an underlying basis, and also see some risk that the Q3 C/A deficit is worse than expected because of the services account."
Eszter Gárgyán, Citibank, Budapest
“Seasonally adjusted QoQ growth accelerated to 0.3% from 0.0% in Q2, which is the only positive trend in the GDP, indicating that growth has bottomed out in Q3. Household and public consumption continued to contract, but the quarterly drop moderated to 0.2% in Q3 to 0.3% in Q2, suggesting a slow recovery is likely to follow in the coming quarters."
“The pick up in services from 1.0%QoQ in Q2 to 1.3%QoQ in Q3 is also an encouraging sign for consumption growth prospects but, given falling consumer confidence, we expect only a slow recovery in household consumption in 2008, supported by the positive net real wage growth."
“Weak investment activity suggests that growth is unlikely to return to 4% by 2009, as the government assumes. Construction output continued to contract sharply, and we do not expect this trend to change in 2008 either."
“Net exports contributed less to growth in Q3 as an unexpected surge in imports narrowed the positive gap of exports and imports. Since the trade data did not show an increase in imports, this is likely to be related to higher levels of services imports, which will add to the current account deficit in Q3."
“October trade data point to exports remaining strong in Q4, and we not expect a deceleration in exports until 2008. The downside risks to Euro-zone growth outlook look to pose risks to the contribution of net exports to growth. We have lowered our growth projection to 2.6% from 2.8% for 2008.
