Q3 GDP came out even stronger in second estimate

HUNGARY - In Brief 06 Dec 2018 by Istvan Racz

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KSH's second estimate of Q3 GDP growth was reported at 1.3% qoq, 5.2% yoy, on seasonally and day-adjusted basis, revising the preliminary figures of 1.2% qoq, 5% yoy. The upward revision is no big deal in itself, but the new quarterly GDP total and details allow analysts to revisit their full-year forecasts. The way we see 2018 as a whole is that GDP growth can be hardly less than 4.8%, which beats even the government's 4.3% forecast, which was regarded as overly optimistic by everyone else (including us, but also the MNB) at the time it was first released in the annual Convergence Report back in April.The main, though not the only, reason behind the better than expected overall growth figure appears to be stronger construction and fixed investment, where both EU development programs and housing construction support performance powerfully. We still expect GDP growth to slow down going forward, to 3.6% in 2019 and 3% in 2020. But the current robust economy will likely be reflected in stronger inflationary pressures, pointing to the increasing need to tighten central bank policy.