The second release of the Hungarian GDP for the second quarter 2002 did not bring a change to the preliminary headline growth of 3.1 % y/y. Nevertheless, the release of the detailed structure was the main attraction of today’s report. Household consumption slowed down only slightly to 7.8 % y/y in Q2 from 8.1% y/y in Q1. The overall consumption rose by 7.3 % y/y compared to 7.6 % y/y in Q1. The gross capital formation prolonged its slump falling 6.6 % y/y as investments slowed down and inventories plunged.
Domestic demand thus slowed down rather significantly to 3.2% y/y from 3.8% in Q1. The higher overall GDP growth was saved by the net export, despite that the surplus was slightly lower than last year. Exports rose 7.6 % y/y but were outpaced by imports rising 7.7 % y/y.
Looking at the supply side of the economy, the depression of industry eased as industry declined only by 0.9 % y/y. Services, on the other hand, decelerated to +4.0 % y/y.
Above all, today’s data confirmed that household consumption continued to surge in Q2. The slowdown of domestic demand was mainly caused by lower capital formation. Furthermore, the current growth in investments was only made possible by activities of government. This trend is clearly imbalanced and the central bank will remain vigilant.
The current tendencies should be maintained in the second half of 2002. The recent improved results of industry and surging wages seem to support the expected moderate acceleration of GDP growth in the rest of 2002. On the other hand, net exports will probably start to deteriorate to some extent as external demand falters.
Jakub Dvorak, Investment research, CSOB