Industry continued to lead the recovery in June

HUNGARY - In Brief 08 Aug 2021 by Istvan Racz

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The first report on important Q2 data has been released. It is about industrial output, which fell by 0.3% mom but rose by 18.5% yoy in June. In the first place, this means that output stood at 4.8% higher in real terms than in June 2019, which we use as a meaningful pre-Covid base.Second, the June data shows that industrial output went up by 37.1% yoy in Q2, against a heavily Covid-hit base, of course. As the Finance Ministry now expects 13.7% yoy GDP growth for the same period, on the basis of its Weekly Economic Index, the easy conclusion is that industry did not only lead the recovery, but it must have given about 65-75% of total yoy GDP growth in Q2.Compared to 2019, industrial growth was naturally much less spectacular, but not at all insignificant. Travelling on the back of the general European upturn of industry, and maybe even winning some market share within the region, domestic output was 2.6% higher than two years ago in Q2 and 2.9% higher in the whole of H1. But please, note that the two-year growth of GDP, as expected by the Finance Ministry, is not more than 0.4% yoy for Q2 and H1 alike. Compared to that, the industrial sector still seems to be the leading force behind the recovery.H2 will have to be different, of course: services will have to make a much bigger contribution to growth than in H1 if the current official forecasts of 6-6.5% real GDP growth for 2021 as a whole are not to be defeated.