In light of the latest data published by the Hungarian Central Statistical Office (KSH), it can be concluded that growth has rebounded in each and every economic sector in Hungary. In comparison to the corresponding period of the previous year, GDP gained 2.7 percent, a growth rate unmatched in the past eight years. In the entire year of 2013, the Hungarian economy expanded by 1.2 percent.

On the basis of data, GDP increased by 0.5 percent quarter-on-quarter. The agricultural, industrial and construction sectors have all contributed to this figure. The dynamic growth of agricultural output was also underpinned by weather conditions which were much more favourable compared to the year of 2012. The more than 5 percent growth of industrial production was driven by rebounding external demand, recent car industry capacity expansion and a positive U-turn of internal demand.

In addition to the sector’s dynamic growth, construction sector output increase, which exceeded 10 percent, was also contributable to investment growth fuelled simultaneously by Government projects, EU transfers and private sector demand. By the end of last year, along with productive sectors certain service sector divisions (retail trade, catering, transport) have also added to GDP growth. Recent data have all been above market expectations.

It is also a positive development that economic growth has become more balanced, as parallel to improved external demand domestic sales have also picked up. Foreign trade volume has recently hit a record high. The volume of exports continues to exceed that of imports, and in 2013 foreign trade surplus reached a historic high amount of EUR 7.3bn, due mainly to the outstanding performance of the industrial sector in general and vehicle manufacturing in particular.

In addition to the good export figure, domestic demand is also on the rise. Following the approximately 3 percent increase of retail sales registered in the  fourth quarter, household consumption is expected to continue to improve, owing to utility price cuts, the wage hike of teachers and healthcare sector employees, the above-inflation wage increases and improved consumer sentiment. Government measures such as the childcare allowance extra, the extension of family tax allowance or the hiking of minimum wages also boost the amount of disposable income.

Economic growth has become more sustainable, as with the gradual pickup of growth in the past couple of quarters the country’s foreign trade balance has also improved step-by-step. The deficit of the state budget also remained well below 3 percent in 2013.

The steady acceleration of the Hungarian economy has a positive effect also on the labour market: the number of those in employment has increased to more than 4 million, the highest figure registered since 1992. As another noteworthy phenomenon, the number of unemployed people decreased significantly, by some 70 thousand, over the past year.

Economic growth and improved employment in turn result in higher incomes, which are expected to fuel household consumption in the future and, simultaneously, to improve the state’s fiscal balance.

Economic estimates regarding the coming quarters are favourable, and positive expectations are being confirmed by the anticipated rebound of external demand, more optimistic business and consumer sentiment figures as well as remarkable data on the stock of orders.

(Ministry for National Economy)