GDP growth: below expectations again

According to the preliminary data, GDP grew by 2.3% on a year-on-year basis, and by 0.5151113_GDP_3név_EN% compared to the previous quarter. The year-on-year 2.3% is another significant slowdown compared to the 2.7 posted in Q2, let alone the 3.5% of Q1. No more among the a front-runners, Hungary fell back into the middle group of the EU28 in terms of the pace of GDP growth.
Also, the pace of growth is below our projection of 2.6%. Since the CSO declared that industry and several service sectors remain the main drivers of growth, agriculture is the most likely culprit of the sharper-than-expected deceleration. Apparently, agricultural value added kept falling at a rate of about 15%, instead of easing to a milder pace. At the same time, industrial growth was likely to slow down according to the expectations – by about 0.6 percentage point – while the growth in services probably picked up some pace.
As for the expenditure side, the culprit is less clear: it might have been the social transfers in kind, holding back the growth of overall household consumption, even as the growth of consumption expenditures – probably – accelerated. Or it could be a harsher-than expected deceleration of growth in fixed capital formation, or another fall in inventories, due to the decrease in agricultural output. We assume that the domestic use of GDP grew by about 2.3%, while previously we expected it to grow at a rate above 2.5%. The growth contribution of net exports took a hit, but it remained positive.
In the light of the third quarter data, and the underlying factors we suppose behind it, downward risks on our 3% growth forecast for 2015 have increased.