Revised Q3 GDP data reflects increasingly robust domestic demand

HUNGARY - In Brief 05 Dec 2017 by Istvan Racz

---

Revised GDP data for Q3 came out at 0.9% qoq, 4.1% yoy on sda basis this morning. The quarterly number remained unchanged from the first estimate, but the yoy data jumped from a preliminary 3.8%, partly due to upward revisions affecting previous quarters. Growth accelerated from 3.7% yoy in Q2, and from 4.3% yoy in Q2 to 4.6% if agriculture, the most volatile sector, is excluded.There are significant revisions in this morning's data set, as reflected by the following table:GDP Growth by Major Supply and demand Components*/ sdab = seasonally and day-adjusted and balanced; F: own forecastSources: KSH, own estimates and forecastImportantly, growth was driven by a 7.8% yoy jump by total domestic demand, following 5.1% yoy in Q2. Household consumption is turning really robust, with 4.1% yoy expansion, after a gradual strengthening over the last three years, in response to rapidly expanding household income. Interestingly, Q3 was a relatively weak period for manufacturing and exports, despite the overall strength of the domestic economy as well as external demand.Regarding the immediate outlook, it takes little to forecast an even stronger Q4. In our forecast, detailed in the table above, we only corrected the exceptional industrial weakness of Q3, assumed slightly strengthening expansion of consumer demand but applied relatively modest quarterly growth rates for fixed investment, construction and services. And the result is a somewhat surprising 4.4% yoy for total GDP in Q4, implying 4% growth for full-year 2017. The latter would be quite close to the Economy Ministry's long-held 4.1% prediction and beat the MNB's 3.6% forecast, together with some even more conservative pre...