Mixed macro data reported again in recent days

HUNGARY - In Brief 07 Jul 2024 by Istvan Racz

---

In the past week, Mr. Orbán's lively diplomatic manoeuvres took all of the limelight, but there were also important data releases. Some of the new figures were quite positive, but others were not, and so the overall picture was not particularly impressive. First, the Q1 general government deficit by Eurostat methodology, the main fiscal indicator, was reported at 6.2% of GDP. Indeed, the official figure was 5.4% of GDP, but that is based on official Eurostat methodology, which compares the unadjusted HUF amount of the deficit with seasonally adjusted GDP (apple with pear), and so it artificially reduces the Q1 number and magnifies the Q4 level of the deficit. But the key point is that even the properly calculated number is quite all right, as it compares with a deficit of 10.8% of GDP in Q1 2023, meaning the yoy improvement was really substantial. Second, the NET debt of the central government (total debt less central government bank deposits) was at 63.6% of GDP at end-May, just marginally below the 63.7% ratio measured at end-2023. The gross debt ratio was still at 70.7% of GDP, up from December's 67.8%, but government deposits also grew substantially, so in fact the extra debt was used to increase liquid reserves in the first five months of this year. Third, retail sales grew by 0.1% mom, 3.6% yoy in May. A number of analysts and other voices in the local media regarded this as a poor result. But we would draw attention to the fact that in April-May, the yoy expansion of retail sales was 3.3%, against 1.8% in Q1 and -11.9% yoy in Q1 2023 (see the fix-base chart below). Please, consider that household consumption grew by 3.4% yoy already in Q1, as services, not repre...