The recession ended in Q3 (well, actually in Q2 already according to revised data)

HUNGARY - In Brief 14 Nov 2023 by Istvan Racz

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KSH reported Q3 2023 real GDP growth at +0.9% qoq, -0.3% yoy on seasonally and calendar-adjusted basis. They also revised previous quarters, and so the Q2 data changed to 0% qoq, -2.2% yoy. This means that the economy actually receded in three consecutive quarters through Q1 2023, it stagnated in Q2, and it started to recover in Q3: This data may not be too much consequential for the markets if the latter believed analysts' consensus forecast of +1.1% qoq, -0.1% yoy on this occasion. It may be legitimately asked, of course, how the hardly more than marginal decrease in terms of the year-on-year number is compatible with -4.9% yoy growth in industry, -1% yoy in construction, -7.5% yoy in retail sales, and with most certainly negative real growth of merchandise exports (though the September figure for the latter is not available yet)? The answer is not fully known yet, as the details of Q3 GDP will be made available only with the second estimate (due on December 1). But we know that import growth was even (much) weaker than export growth, and as KSH noted in some brief comments today, the new GDP data was positively affected by significant volume increases of value-added in agriculture and the health care sector.  As regards the latter two, it is to be remembered that in H1 2023, a 36.7% yoy volume growth rate was reported for agricultural value-added, as a weather-driven very strong recovery from the also weather-related output debacle in 2022. Regarding health care, 9.9% yoy volume growth was reported for H1, on account of the sector's catching up from the Covid era, when hospitals were largely closed down for non-Covid cases for a long while, and of the post-Covid ret...