Steep GDP growth in Q1

According to the preliminary data, Hungarian GDP grew by as 4.1% in the first quarter on an annual basis, a sharp improvement compared to the previous quarters. The quarter-on-quarter growth was also respectable, 1.3%. Year-on-year growth was helped by the calendar effect – the seasonally and working day adjusted GDP expanded by 3.7%, a good, although not outstanding, pace in regional comparison. This lower pace still beats the expectations of many forecasters, which implies that either the positive growth contribution of services was higher and/or the negative contribution of agriculture was milder than expected.
The expenditure side is still unknown. The growth was probably driven by the continuation of strong expansion of private consumption and the revival of fixed investments. Furthermore, the external trade data suggests that the growth contribution of net exports has not yet turned into the negative in the first quarter.
The coming quarters will bring a mild deceleration, primarily due to the slow-down in industrial growth, but we expect that in 2017 as a whole GDP will expand at a rate above 3.5%.

GDP en