A mild recession has been reported for Q1 this morning

HUNGARY - In Brief 16 May 2023 by Istvan Racz

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GDP fell by 0.2% qoq, 1.1% yoy in volume terms, according to KSH's preliminary data. This was the third consecutive quarter with negative quarterly growth, as according to downwardly revised numbers, GDP fell by 0.6% qoq in Q4 and by 0.8% qoq in Q3 2022. Analysts in Portfolio.hu's poll expected -0.6% qoq, -0.9% yoy. This was not bad for a forecast, though they were still wrong a bit, predicting worse than the actual for the quarter and better than actual for year-on-year. The way how it was possible was by the downward revision of previous quarters' data. Who was, no doubt, right, was the MNB this time, as the shape of the quarterly GDP growth curve, showing an increasingly mild recession, with almost exactly the 'right' data, was just bang on for the last three quarters on record. And they gave that forecast already in late March, which is quite an achievement, in our view. Who was dead wrong on this data is clearly us, having been way more pessimistic on GDP, though not entirely without reason. Just as a reminder, industrial output fell by 3.8% yoy and construction dropped by 8.8% yoy in Q1, both in gross output terms. Retail sales went down by 8.2%, also affecting large service branches like retail and wholesale trade as well as transportation, negatively. And the central government's spending on fixed investment fell by 31.2% yoy in nominal terms. True, guest nights at hotels rose by 1.3% yoy in Q1, and merchandise export volumes grew faster (+7.1% yoy) than imports (+5.7% yoy) in January-February, but not a lot faster. It just does not come easy to conclude to a mildly decreasing volume of GDP from these numbers, in our view. On how it actually happened, the publi...