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Macroeconomic Outlook – August 2022 issue

On the basis of raw data, domestic GDP grew by 8.2% in the first quarter of this year compared to the same period in 2021. Contributing to this is the good performance of services in the first quarter, followed by the industrial sector, at around 1.2%. In terms of expenditure, the obvious contributor was the final consumption of households, which reached 6.9%. The current geopolitical environment undoubtedly weighs on growth and remains a significant adjustment variable for future activity, with EU sanctions and rising energy and raw material prices being risk factors. The Covid epidemic also seems to be slowly picking up in several countries, therefore the state measures to curb the phenomenon needs to be monitored in the coming months.

Source: EXIM Hungary, Factset, HCSO, Eurostat

Domestic sales in retail trade (April 2015 = 100)

Source: EXIM Hungary, Factset, HCSO

Domestic industry grew by 1.5% in June 2022 compared to the same month of the previous year, and it rose by 5.1% overall in the first six months compared to the first half of 2021. The volume of industrial exports expanded by 2.7% in the same period and domestic industrial sales increased by 7.1%. While the rubber and plastics products manufacturing and the manufacture of basic metals fell by 3.6% and 6.2% respectively, due to material supply disruptions, almost all key sub-sectors boosted industrial performance. Food production increased by 9.3% (accounting for 12% of the whole domestic manufacturing output) and in particular, electrical equipment production rose by 17% due to the batteries and accumulators. While the volume of new orders in the major subsections of manufacturing decreased by 3.2% compared to June 2021, the total stock orders increased by 22% compared to the same month of the previous year.

Industrial production Hungary (seasonally adjusted, 2015 = 100)

Source: EXIM Hungary, Factset, HCSO, Eurostat

The second piece of good news relates to employment: the unemployment rate has reached 3.3% with around 160,000 people actively seeking employment, the lowest level since February 2020, but with a higher participation rate than before. This very good employment environment will mechanically stimulate consumption, which will hopefully contribute to the growth in the next six months. So far, this has been confirmed, with retail trade growing by 4.5% in June 2022 (+10.3% in the first 6 months of the year), driven mainly by second-hand goods, pharmaceutical and medical goods, computer equipment and automotive fuel. Fueled by both household activity and business developments, investment is and will hopefully remain one of the two strong drivers of economic expansion in the coming period. The construction sector contributed to the high performance of investments with a 9.9% increase, outperforming May 2021, thanks to the very good indicators in the residential sector. Investment in machinery and equipment was boosted by foreign trade.

Source: EXIM Hungary, Factset, HCSO

Volume indexes of investments in national economy (seasonally adjusted, average of quarters YoY, 2015 = 100)

Source: EXIM Hungary, Factset, HCSO

Volume index of construction output (seasonally adjusted, 2015 =100)

Source: EXIM Hungary, Factset, HCSO, OECD

The deficit of external trade in goods was € 471 million compared to the previous June, nevertheless the value of exports was € 1.78 billion higher (13% increase) in the same period. The external trade in services also performed well in the first quarter because it amounted to € 1.42 billion surplus, an increase of € 552 million compared to the same quarter of the previous year. Exports of services increased by 28% YoY mainly driven by travel, transport services and manufacturing services on physical inputs.

Hungarian external trade in goods (in M€)

Source: EXIM Hungary, Factset, HCSO

Elérhetőség: research@exim.hu

Utolsó módosítás dátuma: 16 August 2022

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