- GDP declines 0.7% vs previous quarter; analysts’ est. +0.1%
- Hungary enters recession for second time in two years
Hungary’s economy unexpectedly entered a recession in the third quarter as domestic consumption failed to make up for a deep downturn in industrial production.
Gross domestic product fell 0.7% in the July-September period compared with the previous three months, according to preliminary data released by the statistics office on Wednesday. The median estimate of economists in a Bloomberg survey saw an expansion of 0.1%.
The decline follows a contraction in the second quarter and marks the first recession since early 2023. The weak performance of industry and agriculture subtracted 2 percentage points from the economic output in the third quarter, with services limiting the scale of the downturn, the Budapest-based statistics agency said in a statement.
“Nobody expected the economy to perform so poorly,” ING Bank Hungary economist Peter Virovacz said in a note. “It seems like to reach its goal for next year’s growth, the government would have to implement a new stimulus package, but that would put the budget deficit target into question.”
The forint dropped to its lowest against the euro since December 2022. The currency’s weakness has already thwarted central bank plans to keep lowering interest rates that at 6.5% are still the highest in the European Union.
Economy Minister Marton Nagy had warned that GDP would likely miss forecasts, blaming the economic woes on the stagnation of Germany, Hungary’s biggest export market. The government is drawing up stimulus programs in an attempt to restart the economy before elections in 2026.
“A big jump in economic performance can only be expected in the third quarter of 2025,” Nagy said in a statement following the release.
Written by: Marton Kasnyik @Bloomberg
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