Published on: 1 December 2020

Economic performance grows by 11.4% compared to previous quarter and decreases by 4.6% compared to a year earlier

The volume of gross domestic product went down by 4.6% in Hungary in the 3rd quarter of 2020 compared to the corresponding period of the previous year. According to seasonally and calendar adjusted and reconciled data the performance of the economy was 11.4% higher than in the previous quarter and 4.6% lower than in the corresponding period of the previous year. In the 1st–3rd quarters of the year, the economic performance declined by 5.5% according to raw data.

In the 3rd quarter of 2020 compared to the corresponding period of the previous year:

The volume of GDP decreased by 4.6%. Compared with the 3rd-quarter figure issued in the flash estimate, the raw volume index in the second estimate was unchanged1.

Production approach:

The performance shrank by 2.4% in industry, within which by 1.9% in manufacturing compared to the same period of the previous year. Among manufacturing branches, increases in the manufacture of electrical equipment and the manufacture of other transport equipment (i.e. other than motor vehicles, trailers and semi-trailers) moderated the decline. The value added of construction was down by 17.6% and that of agriculture by 3.8% compared to the corresponding period of the previous year.

Table 1: Volume indices of production of gross domestic product (GDP)

(corresponding period of previous year = 100.0%)

NACE Industry 2019 2020
quarter
III IV I II III
AAgriculture, forestry and fishing99.0101.399.698.096.2
B–EManufacturing, mining and quarrying and other industry106.4101.9101.979.997.6
C Of which: manufacturing105.7100.5101.378.398.1
FConstruction110.5103.4102.086.982.4
G–TServices, total, of which:104.6105.2102.388.096.0
G Wholesale and retail trade111.7112.2107.895.8101.8
H Transportation and storage106.7105.9101.374.180.1
I Accommodation and food service activities106.1109.790.740.579.1
J Information and communication109.4108.9109.099.1105.3
K Financial and insurance activities108.4108.7104.4103.5102.9
L Real estate activities98.499.1102.893.897.4
M–N Professional, scientific, technical and administrative activities105.8105.8104.485.290.4
O Public administration and defence99.999.197.297.299.2
P Education97.8102.5100.192.998.3
Q Health and social work activities100.9102.793.564.3101.4
R–T Arts, entertainment and other services106.1106.0102.073.192.1
GDP, total (at purchasers' prices)104.7104.2102.286.495.4

The gross value added of services as a whole diminished by 4.0%. The highest falls (20.9% and 19.9%) were in the industries of accommodation and food service activities and transportation and storage, respectively. The performance of wholesale and retail trade increased by 1.8%. The value added of professional, scientific, technical and administrative activities and arts, entertainment and other services went down by 9.6% and 7.9%, respectively. The performance of financial and insurance activities rose by 2.9%. The value added of public administration and education lessened by 0.8% and 1.7%, respectively. The value added of health and social work activities grew by 1.4%.

Services caused a 2.2, industry a 0.4 and construction a 1.0 percentage point decrease in the 4.6% decline of gross domestic product in the 3rd quarter of 2020. Within services, the most significant reduction (of 1.0 percentage point) in the economic performance was observed for transportation and storage.

Expenditure approach:

The actual final consumption of households lessened by 2.2% compared to the same period of the previous year. Household final consumption expenditure, representing the largest proportion of the components of the actual final consumption of households, decreased by 2.7%. The (domestic) consumption expenditure of households realised on the territory of Hungary became more substantially, 6.6% lower than a year earlier, since the consumption expenditure of non-residents (e.g. tourists) declined significantly in the 3rd quarter. Within this, the volume of domestic consumption expenditure on durable goods grew (by 3.4%), while that on the remaining groups declined: by 4.7% on semi-durable goods, by 2.1% on non-durable articles and by 11.9% on services.

The volume of social transfers in kind from the government became 0.2% larger, while that of the actual final consumption of the government 4.8% smaller. The volume of social transfers in kind from non-profit institutions serving households (NPISHs) rose by 0.8%.

As a result of the above trends, actual final consumption became 2.5% lower.

Gross fixed capital formation went down by 13.7% in the 3rd quarter compared to the corresponding period of the previous year. The volume of investments in construction and in machinery and equipment both significantly fell. The volume of investments became lower in the majority of industries.

Gross capital formation decreased by 8.7% compared to one year earlier.

As a result of the trends of consumption and capital formation, domestic use as a whole became 4.6% lower in the 3rd quarter.

Table 2: Volume indices of final use of gross domestic product (GDP)

(corresponding period of previous year = 100.0%)

Items of use 2019 2020
quarter
III IV I II III
Household final consumption expenditure104.7104.9104.691.797.3
Social transfers in kind from government97.5110.198.989.8100.2
Social transfers in kind from NPISHs96.2105.4102.698.3100.8
Actual final consumption of households103.2105.8103.691.697.8
Actual final consumption of government108.7106.699.6103.595.2
Actual final consumption, total104.0105.9103.093.397.5
Gross fixed capital formation114.2104.095.989.186.3
Changes in inventoriesa)xxxxx
Acquisitions less disposals of valuablesa)xxxxx
Gross capital formation, total106.5109.5106.793.991.3
Domestic use, total105.1107.1103.993.595.4
Exports, of which:110.2102.399.775.894.8
Exports of goods110.5101.3101.179.9102.7
Exports of services109.3105.993.861.770.8
Imports, of which:111.0106.0101.483.694.8
Imports of goods110.9105.4102.784.699.4
Imports of services111.4109.394.578.273.6
External balance of goods and servicesa)xxxxx
Gross domestic product (GDP), total104.7104.2102.286.495.4

a) For these items the volume index is not applicable.

In the external trade of the economy a surplus was generated again at current prices, its value was 509 billion forints. The volume of exports and imports decreased at the same rate, by 5.2%. In trade in goods, exports were 2.7% higher, while imports 0.6% lower than a year earlier. Within the external trade of the economy, the exports of services (including tourism) dropped by 29.2% and their imports by 26.4%.

Actual final consumption caused a 1.7, gross capital formation a 2.8 and the balance of external trade as a whole a 0.1 percentage point decrease in the 4.6% fall of gross domestic product in the 3rd quarter of 2020.

In the 3rd quarter of 2020 compared to the previous quarter, according to seasonally and calendar adjusted and reconciled data:

The performance of the economy grew by 11.4%.

From the production approach, gross value added went up by 24.2% in industry and by 10.0% in services and decreased by 1.3% in agriculture and by 4.1% in construction.

From the expenditure approach, household final consumption expenditure rose by 7.4% and the volume of social transfers in kind from the government by 13.1%, while the actual final consumption of the government became 2.0% lower out of the components of actual final consumption. Gross fixed capital formation increased by 1.3%. In external trade, the volume of exports jumped by 28.9% and that of imports by 18.7%.

The ’annualised index’, published for a long time in US dissemination practice and built on dynamics projected for the future, indicates a 53.9% growth for the 3rd quarter, after a 46.8% decline measured for the previous quarter. The annualised index shows the extent of annual change, supposing that the volume change in the current quarter – compared to the previous quarter – continued for four quarters.

Table 3: Seasonally and calendar adjusted quarterly and annualised* volume indices of GDP

(%)

Year I II III IV I II III IV
previous quarter = 100.0 annualised index
2017101.5101.2100.9101.4105.9105.0103.5105.8
2018101.8101.1101.3101.0107.5104.5105.1104.2
2019101.6100.8101.0100.6106.6103.0103.9102.6
202099.685.4111.498.653.2153.9

* It is assumed in calculations that the change compared to the previous quarter remains constant for four quarters. Although the annualised index decreases sooner as an impact of an unexpected decline, it better follows the trend of recovery than the seasonally and calendar adjusted and reconciled volume index compared to the corresponding period of the previous year.