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alongside consumption on the final use side. With life getting back to normal, people will use their savings to buy experiences (and maybe goods too). Recreation services, travelling, arts and
sudden stop of the economy during spring 2020, the year-on-year GDP growth will show us an extreme number, maybe around 17%. With such a first half of 2021, it is almost impossible for
“The strong quarterly based GDP growth in the first quarter of 2021 was more than surprising – almost shocking in a positive way"
entertainments are all open now (with only minor restrictions) along with bars, restaurants and cafés.
As the past two quarters of consumption depleted inventories, we expect companies to stock up on inventories during the re-opening phase, boosting economic activity. Housing market programmes and infrastructural developments will fuel the construction sector. Industry remains an enigma, but all in all, we can’t see a collapse here. Last but not least, there is investment activity. Again, government projects will support this, but the upcoming turnaround from the monetary policy (i.e. rate hikes and a possible scaling back of lending programmes providing cheap money) might encourage companies to take loans before rates become higher.
All of these can translate into another 2%-ish q/q GDP rise (or even more). With the low base provided by the
the Hungarian economy not to register record-high GDP growth for the full year. With the possibility of EU transfers coming during the second half and the general election approaching, we see additional booming economic factors during the second half of 2021. With
all that said, we see the Hungarian economy registering a 7.4% GDP growth this year.
Peter Virovacz is ING’s chief economist for Hungary. This note first appeared on ING’s THINK.ING portal.
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The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument.
Contributions to GDP growth – expenditure side (% YoY)
Source: HCSO, ING
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