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growth, although much lower than in [the fourth quarter],” Bank Millennium said in a comment.
“The pandemic will have a destructive impact on the economy in Q2,[as] reflected in our expected GDP decline of 10% y/y, or even more. Indicators point to a sharp collapse in both consumption and investment. On the supply side, a significant reduction in activity applies to both the industry and, above all, the service sector ... affected by the effects of social isolation,” the bank added.
“The figures for Q2 will be much worse. Consumer confidence has collapsed in Poland and survey measures point to job losses on a scale not seen before,” said Capital Economics.
The fallout from the lockdown impacted Hungary’s economic performance in Q1, but to a lesser degree than analysts had projected, according to preliminary figures by the Central Statistics Office (KSH) on May 15.
Hungary's annualised Q1 GDP growth slowed 2.2% from 4.5% in the previous quarter, as the coronavirus crisis had
a negative impact on most economic sectors in March. Calendar-year adjusted data show GDP rising by 1.8% in the first three months, the slowest growth rate since Q4 2016. On a quarterly basis, GDP contracted 0.4% after a 0.7% increase in Q4. The latter figure was revised down on Friday from 1%. Annual growth in the base period was 5.3% while for the entire last year it came to 4.9%.
The KSH said the lockdown had
a negative impact on all sectors, but Hungary’s industry, accounting for
a third of GDP remained the engine of growth during the period and market- based services also contributed to growth, albeit at a modest pace.
Despite the shutdown of major car manufacturers, Hungarian industry managed to grow 0.1% in Q1. Hungary’s growth compares favourably to other countries and exceeds the EU average by 5pp and Eurozone growth by
5.6pp, Finance Minister Mihaly Varga commented.
Police detain 64-year-old Hungarian for Facebook post critical of PM Viktor Orban
Tamas Szilagyi in Budapest
A 64-year-old man was detained by police on May 12 at his home in northeast Hungary and taken into custody on suspicion of fear-mongering.
The man, referred to as Andras by local media, was interrogated in connection with a post he made on Facebook on April 28, which, according to police, alleged that the country's leadership had deliberately timed the lifting of curfew restrictions to coincide with the peak of the coronavirus (COVID-19) pandemic, which the man suggested could lead to mass infections.
In the post he made a plea not to relax curfew restrictions on the day after the projected peak of the pandemic and thus, as he put it, "send thousands to their deaths".
"You are a cruel tyrant, but remember, all dictators have failed so far," he closed his post.
"The police asked questions like who exactly I was calling a dictator," the man told 444.hu newsite "I told them their task had achieved its result and would probably shut me up," he added.
No charges were pressed against the man. The police said in a statement that they would constantly monitor the internet and are taking necessary measures, including removing objectionable content or, in more serious cases, initiating criminal proceedings.
Hungary's parliament adopted a law on March 30 to allow the government
to extend the state of emergency without a time limit and grant power to the government to rule by decrees until the state of emergency is in place. The regulation has come under fire from all places. Anyone convicted of publishing fake news faces a prison term of up to five years.
In a recent report US-based NGO Freedom House said Hungary has ceased to be a democracy and can now be qualified as a "hybrid regime'', according to its latest 2020 Nations in Transit report. Between 2015 and 2019, the country steadily dropped while remaining in the range of "semi-consolidated democracies", but in 2020 it became the first country to descend by two regime categories and leave the group of democracies entirely.
Hungary is currently under an Article 7 procedure for breaching fundamental rights, which could end up stripping the country of its voting rights.
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