Analysts expect double-digit Hungarian GDP growth for the third quarter

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The second wave of the coronavirus pandemic and the related restrictions have led most economists to now expect a W-shaped recovery. Although this means that a second drop is coming, at least Hungary’s economic recovery could be better than expected in the third quarter, conservative daily Magyar Nemzet writes.

ING Bank macroeconomic analysts recently upgraded their growth expectations for the third quarter to 10.5 percent, while for the same period, TakarékBank expects an 11.4 percent quarter-over-quarter growth. At the same time, Ágnes Halász, an analyst at UniCredit Bank, has outstandingly optimistic expectations of as high as 15.7 percent. All three, however, acknowledge the upturn will be short-lived. 

This offers some encouragement, especially since in the second quarter, economic performance was down 13.6 percent year-over-year.

On a year-over-year basis, data are less promising: Gergely Suppan, lead analyst at TakarékBank expects a decline of 4.7 percent compared to the July-September period of last year

“It is impossible to predict what the coming weeks will bring; it is definitely a positive development that the industry has recovered. There are no downtimes similar to the first wave in the spring, and supply chains are working. As stated, if the vaccine provides the right level of vaccination for next spring, farm performance could explode in the second half of next year,” Suppan told Magyar Nemzet.

ING Bank senior analyst Péter Virovácz called current high estimates an “optical illusion.” His more conservative estimate is for a 5.4 percent contraction in GDP compared to the third quarter of last year, and a 6.1 percent decline for 2020.

According to him, it was mainly industry and services that could pull the economy up spectacularly from the second quarter base.

“However, the latest monthly data show that the performance of the fourth quarter may be well below the period ending in September,” Virovácz said, pointing out that the recovery in retail sales will not translate into Christmas sales as in other years. Purchases started back up significantly in September, and now the period of precautionary savings is coming again.

In the third quarter of this year, compared to the same period last year, market expectations are likely to cause an economic collapse of around 5 percent and an average decline of 6 percent for 2020.

However, it should also be noted that due to emergency closures and unpredictable downtimes, gathering statistical data will be less reliable than in normal times.

“The emergency situation caused by the coronavirus epidemic has caused rapid changes in the economic environment that affect data quality, the effectiveness of estimation methods, and seasonality and may have a greater impact than usual on the size of future revisions. However, the Office has not changed the way it calculates GDP,” the Central Statistics Office (KSH) told Magyar Nemzet.

Title image: Audi factory in Győr, northwestern Hungary. (MTI/Csaba Krizsán)

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