GDP: sharper than expected slowdown

According to the preliminary data, GDP grew by 2.7% in the second quarter year-on-year, a substantial deceleration compared to 3.5% in Q1, and also well below our expectation of 3.1%.

The Central Statistical Office (CSO) says that agriculture was the main culprit behind the s150814_GDP_tény_ENlowdown. This makes sense, as the industrial and construction data have pointed to much milder deceleration, implicating that agriculture – as perhaps services – were the main drag on growth. In the light of today’s data, agricultural output probably fell at a two digit pace, just as in Q1.

On the final use side of GDP, as merchandise trade data for Q2 was markedly favourable, hence domestic use must have been responsible for the slowdown. In light of retail trade data, deceleration of private consumption (from the 2.6% growth registered in Q1) is possible. Yet, the continuation of the fall in fixed capital formation at a pace of 2-3% – as opposed to the near-stagnation expected by Kopint-Tárki – seems more likely.

Since April, we have been predicting a GDP growth rate of 3.2% for 2015 as a whole. Today’s release of an unexpectedly weak growth performance in Q2 puts this figure under (downward) pressure that we will be considering in the coming period.