The national economy managed to grow another 3.2% in the third quarter year-on-year – thanks to the strong first half this year the Central Statistical Office (KSH) could even announce growth of 3.6% for the first nine months.
The first estimate for the first quarter is based on limited information but the KSH assumes that besides industry, agriculture has also contributed to the positive surprise. After five quarters of growth the economy reached a top score of 3.9% for the second quarter this year, which put Hungary among the top players in Europe. Only Poland and Romania managed better.
Decreasing dynamic in individual industrial branches
Actually everyone agreed that this momentum will not last long. The real engine behind the growth, industrial production, said goodbye to two-digit increases at the end of summer; the dropouts of August not only ruined the statistics, they also marked the end of the continuous growth trend.
Something similar happened to the construction segment as well. Its performance showed growth of 34% in March against the previous year but in September this number was only 7%. Not many people would have believed that agriculture still held surprises after the high income earned in 2013. With 7.2 million tons, the best grain crop of the past five years has been harvested. In the case of wheat the yield per hectare was almost 25% higher than the usual average over the years.
The time of the high scores is over for the time being; the growth of 0.5% in the third quarter compared with the second quarter is the weakest result since the end of the recession. (In 2012 and in the beginning of 2013 national economic growth had a negative sign for five consecutive quarters.)
Experts are expecting a long-term decreasing trend because besides the fragile Euro-conjuncture and the sharpened conflict in the neighbouring Ukraine (the sanctions introduced against Russia are hitting Hungarian exporters hard) there are many other plausible explanations.
For one, the growth in the summer reached an eight-year high, which is not really an everyday performance. For two, as Zsolt Kondrát, the leading analyst of MKB Bank suggested, the absorption of the EU funds has a limit – the high speed of public investments and construction projects that we have experienced this spring is simply not maintainable on the long term.
The automotive industry cannot continuously grow by 20-25% either. The new automobile production plants of Mercedes-Benz in Kecskemét and Audi in Győr have increased their capacity by switching into three-shift operation, so now that reserve is also exploited. In this regard the Suzuki plant in Esztergom may be the beacon of hope, since at the moment they are only working in one shift due to a model change, and they will be changing to two shifts in January.
According to the most recent results the retail sector could not fulfil the expectations of the economics department either. However, this sector might be the foundation of fulfilling expectations, since as Minister for National Economy Mihály Varga said, every family must invest in a new fridge sooner or later.
The conversion of foreign-currency loans into HUF-based loans should help in this, since the sum of monthly repayments for each family should decrease by 25% on average. In recent years the government introduced many benefits for families, which should increase demand in the retail sector. It will also result in a growing readiness to save money, which will have its own advantages in turn.
The Ministry for National Economy also highlighted in its analysis of the current growth result that the conjuncture process is structurally balanced and maintainable in the long term. After all, economic growth can still be higher this year than the official prognosis of the government, which was 3.2%.