Negative GDP growth reported for Q1

HUNGARY - In Brief 30 Apr 2025 by Istvan Racz

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Preliminary, seasonally and day-adjusted GDP data shows -0.2% qoq, -0.4% yoy real growth for Q1, as reported this morning. This came after +0.6% qoq, +0.1% yoy in Q4, and 0.5% growth in full-year 2024. In an unusually brief statement, KSH only said that Q1 growth was supported by services but held back by industry and construction.Locally, analysts and the media have called this result horribly poor. Portfolio.hu's usual analyst poll had a median expectation of +0.3% qoq, half a percent higher than the actual.In terms of full-year forecasts, the government originally (back in November), inserted a 3.4% growth figure into this year's budget. Then a few weeks ago, they reduced that to 2.5%, for purposes of the estimation of next year's budget plan. A few days ago, analysts had a median expectation of 1.8% annual growth for this year. About a week ago, we predicted 1% annual growth. But even for that latter one to be achieved, industrial output (cars and batteries mainly) will have to stabilise in the rest of 2025.Chart-wise, all this looks as follows:This shows that the last time there was material growth in the domestic economy was in H1 2022, essentially when Russia's invasion of Ukraine began. Since then, the economy receded in seven out of the total eleven quarters, resulting in a 1.4% decrease in total for the whole period.Regarding the details on Q1, the limited information currently available includes external trade and tourism. Merchandise exports were actually up by 1.4% yoy, volume terms, in Q1, an improvement from one year ago, when exports fell by 3.6% yoy. However, merchandise imports strengthened a lot, to +2.8% yoy in Q1, from -13.3% yoy one year earlier, ...