GDP in Hungary increased by 2.6 percent during the second quarter of 2016, an outstanding figure in EU comparison and the second highest level of Q2 growth within the European Union. Despite the fact that the level of EU funding received by Hungary was again lower than expected in the second quarter of the year, the growth trajectory of the Hungarian economy continues to show promising signs. Hungary’s GDP is currently 10 percent higher than its 2010 level.
The total rate of growth for the first half of 2016 was 1.9 percent, which was significantly contributed to by the fact that practically every sector performed well between April and June.
Industrial production increased by 3.9% compared to the first quarter and despite flood, storm and frost damage agriculture is expected to produce an excellent harvest. The sector’s production increased by 13.4 percent compared to the same period last year, thanks to a significant extent to the fact that 8 million tons of maize are expected to be harvested in the autumn compared to 6.5 million tons last year.
The service sector also achieved significant growth, thanks in part to the fact that the population is gradually earning more money: gross incomes increased by 6-6.5 percent during the first half of the year. The demand-stimulating effect of the increase in real wages also led to growth of some 8 percent in the retail and tourism sectors. Thanks to the above, consumption broke a 13-year record: household consumption grew by 5.1 percent, the highest increase since 2003. Other factors leading to the increase in addition to the outstanding wage dynamics include the close to zero percent inflation environment and the significant year-on-year increase in employment of some 140 thousand people registered in Q2 of this year.
In addition to consumption, net exports also had a tangible stimulating effect on growth, in harmony with the increase in industrial production.
(Ministry for National Economy)