According to the CSO’s flash estimate, GDP rose just 0.8% y/y in the third quarter of 2008 - remaining well below expectations - after the 2% y/y seen in 2Q08. Taking the calendar effect into consideration, the economy grew by just 0.7% y/y in 3Q08. Compared to the previous quarter, the GDP declined 0.1%. The CSO indicated that the performance of the manufacturing industry and the construction industry pulled down the figure, while exports slowed. The breakdown of the figures will be available on December 9.
The higher than expected slowdown in GDP growth is very negative, as earlier we had expected the economy to grow below 1% y/y just in the last quarter of 2008. Latest data show that unfavorable processes seen in the Euro area has negatively affected the performance of the Hungarian economy already in July-September, earlier than expected. The good performance of agriculture seems not to have been able to offset the poor industrial and export performance. As for the GDP growth prospects, the outlook is not too bright. Apart from poor growth outlook of global economy, tighter credit conditions and the drop in real wages, expected for 2009 do not suggest any revival of domestic use in the coming quarters.
