GDP growth was surprisingly robust in Q4 2015

HUNGARY - In Brief 12 Feb 2016 by Istvan Racz

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Another interesting data set came out of KSH this morning. Real GDP growth accelerated to 3.2% yoy, on unadjusted basis, in Q4 2015, sharply up from 2.4% yoy in the previous quarter. This beat the average analyst expectation of 2.6% by a substantial margin. On sda basis, growth in Q4 was reported at 1.0% qoq, 3.0% yoy, the latter also sharply up from a previously known 0.6% qoq, 2.3% yoy in Q3. Full-year GDP growth for 2015 came out at 2.9%, down from 3.7% growth in 2014, and in line with economy minister Varga's preliminary estimate, which he gave already in early January. As usual in the case of first estimate GDP releases, neither supply nor demand details were made available, which implies that a full explanation of the data cannot be given at this stage. Based on Q4 monthly data, a key contributor to the strength of GDP must have been manufacturing, and within that the acceleration of growth in car and car component production, as usual. Given that construction pulled down growth quite sharply, in addition to which retail sales and tourism growth also decelerated in Q4, some recovery in agriculture is quite likely to have been taken into account by the KSH, though there is no way to verify that for the time being. Finally, the sharp weakening of oil prices may have played a role in the surprise results as well. This is because the monthly sectorial data released by the KSH normally refer to gross output or turnover, and at times of major downward movements in commodity prices, it is quite easy to overestimate intermediate consumption, which implies underestimation of GDP, of course. The other tricky detail about the new data is that the KSH revised its qoq GDP gro...