Hungary’s second quarter GDP data came as a slight positive surprise, but analysts say the economy’s structural problems have not changed, with general stagnation still looming, Portfolio.hu.

Q2 data was 0.4 percent better than Q1, better than the consensus forecast being 0.2 percent and avoiding recession, given the zero growth seen in the first quarter. 

However, the near-stagnation picture did not change, Portfolio points out, with the Central Statistical Office reporting a 0.1 percent decline in the first half of the year.

Growth was driven primarily by services, especially information and communication, and consumption, while industry, agriculture and investment remain weak. A full breakdown will only be available in September. 

The driving force of the Hungarian economy has been private consumption, notes the portal, while industrial exports continue to lag, a situation worsened by the ongoing war, weakness elsewhere in Europe, and tariffs from the U.S. Poor weather, from heavy rain to drought, has hit agriculture, and this is expected to continue to be a problem through the end of the summer. Construction, on the other hand, was a positive contributor. 

Most banks now expect annual growth of 0.7-0.8 percent, but the outlook remains fragile. The government itself has cut its forecast for 2025 to just 1 percent from the 2.5 percent previously expected. It should be noted that the government had adopted its 2025 budget assuming growth of 3.4 percent. For 2024, Hungary saw .5 percent GDP growth.

Despite the better than expected Q2 number, this is only the fifth quarter in the last three years that Hungary has seen an expansion, and the Central Statistical Office has measured a decline in seven, Portfolio reminds. 

According to Portfolio’s calculations, to achieve 1 percent GDP growth, Hungary’s economy needs to grow by 1 percent in each of the next two quarters (compared to the previous quarter). In the past three years, there was only one quarter when this was achieved.