BUDAPEST: Hungary’s economy expanded faster than expected in the second quarter of the year, helped by a pick-up in consumption and output in the vehicle industry.
Annual economic growth accelerated to 2.6 percent from 0.9 percent in the first quarter, preliminary unadjusted data showed on Friday. Analysts had forecast a 1.9 percent rise for the second quarter.
The statistics office said market services, the vehicle industry and agriculture were the main drivers of the increase. Growth in the services sector is an indication that consumption contributes to growth. Central European states have been boosting wages to fight an outflow of skilled labour into richer Western Europe.
A sharp rise in wages and consumption has also helped economic growth in neighbouring Romania where economic output surged by a surprise 6 percent in the second quarter.
“We expect that consumption and net exports were the main drivers of the economic growth,” said Peter Virovacz, an analyst at ING Bank in Budapest.
He said he may lift his full-year growth forecast from the current 2.2 percent, but he added that it would remain hard for the government to reach its 2.5 percent target as that would require 3.2 percent growth in the second half of the year. Economy Minister Mihaly Varga, however, said he was optimistic that growth could accelerate further in the rest of the year.
“We do not need to change our 2.5 percent growth forecast for this year if negative effects decrease,” he said, adding that those included a decline in construction and a slowdown in the inflow of European Union funds and vehicle production.
He said EU transfers have still not reached the expected pace while a government-sponsored housing programme, wage increases and agricultural output could help speed up the rate of growth.
