Finance Ministry expects about 14% yoy real GDP growth for Q2

HUNGARY - In Brief 07 Jul 2021 by Istvan Racz

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This morning, finance minister Varga came forward, on his Facebook site, with the following chart, adding a few lines of explanation, full of good spirit and optimism:The chart presents actual yoy real GDP growth in a quarterly breakdown (see the horizontal white lines), against the historical actual values of the Ministry's Weekly Economic Index (Heti gazdasági index in localspeak, represented by the somewhat nervously moving orange dotted line) and the quarterly yoy GDP growth rates estimated on the basis of the weekly index (see the horizontal orange dotted lines).Unfortunately, the Ministry has never cared for publishing the components or even the aggregate historical values of the weekly index, since it first emerged as a newly devised leading indicator, used to predict GDP growth, in the early days of Covid last year. So we only know that the index is composed of data with daily availability, obtained from the Statistical Office, the national electricity grid (the government's agent collect road tolls), NAV (the tax authority) and something from Google Trends. In addition, we have the chart appearing here, from which two conclusions can be drawn immediately:- the index has been doing quite well in terms of predictive strength historically; and- its current prediction for Q2 GDP growth is about 14% yoy or slightly above that.Once again unfortunately, Mr. Varga did not care to disclose a more accurate number than this, so it really takes a hawk-eyed analyst to read the exact value on the chart properly. Anyway, this prediction is lower than the MNB's most recent 16%+ yoy forecast, which was mysteriously removed from the Bank's website at some point over the past tw...