GDP components: some bright spots remain

150904_részletes GDP_felhasználás_ENThe CSO confirmed its preliminary growth estimate: GDP grew by a disappointing 2.7% in the second quarter, year-on-year, and the seasonally adjusted GDP rose by a mere 0.5% compared to the previous quarter. The data on the GDP components, however, include a number of good news too. On the production side, the sluggish growth seems to be due to one single factor, with the continuation of relatively good performance in general. On the expenditure side, the picture is more mixed.

On the production side, the precipitous fall in agricultural value added (by nearly 17%, a significant worsening even compared to the decline posted in Q1) was what pushed the overall GDP growth below. The growth in industry and construction decelerated only moderately, and remained reasonably buoyant. The growth in services even accelerated to 2.4% (from 2.3% in Q1), and more importantly, the growth rate in market services jumped well above 3%.

In the expenditure side, there are some good news too. At last, the growth rate of household consumption expenditures rose to 3% (from 2.7% in Q1), which indicates a revival of households’ willingness to spend – unfortunately, sluggish social incomes in kind kept the actual household consumption from accelerating in line with consumption expenditures. Gross fixed capital formation grew by 5.2%, but only as a result of the upturn in EU funded investment projects, rather than as a sign of reinvigorating investment activity within the overall business sector. Due to a sharp drop in inventories, overall gross capital formation decreased by more than 1%. Yet, even this was an improvement in comparison to the first quarter.150904_részletes GDP_termelés_EN

All in all, domestic consumption rose by 1.4%, an acceleration from 0.5% posted in Q1. At the same time, the growth of both exports and imports decelerated in the second quarter, but the slowdown in the former was much more pronounced, and the positive gap between export and import growth narrowed considerably, resulting in a sharp drop in the growth contribution of net exports (from 3.1 percentage points to 1.4 pp). In fact, this was the decisive factor on the expenditure side behind the stronger-than-expected slowdown in GDP growth.