HU: GDP grew by 0.4% y/y in 4Q24
This morning, the CSO published its flash GDP figures for 4Q24. The actual figures came as a slight positive surprise. Compared to the previous quarter, GDP grew by 0.5% (better than our estimate of just 0.2%), meaning that the economy emerged a bit faster from the technical recession at the end of last year. On a yearly level, GDP rose by 0.4%, according to the raw figure in 4Q24. The annual GDP growth was 0.5% in FY 2024.
The breakdown of the figures will be available on March 4. According to the short comment from the Statistical Office, the positive contributor was the total performance of services. On the other hand, declines in the performances of agriculture, industry, and construction slowed the growth.
This year, we anticipate a gradual recovery from quarter to quarter. A rebound in consumption should continue, supported by still positive real wages and the incoming large coupon payments of inflation-linked retail bonds. Cautiousness is justified, however, as a worsened inflation outlook coupled with increasing inflationary expectations may create a drag on the recovery of consumption. Some delayed investments are set to take place in 2025, providing more support from the investment side. As for the industry, the start of production at the BYD, BMW, and Mercedes plants is positive for export prospects. However, a favorable turnaround in this field remains dependent on the overall state of Hungarys main export markets.
Permanent stagnation of the German economy is rather unfavorable from this perspective, and there are still few positive signs that a meaningful dynamization may start in Germany. Forecasts for GDP growth for the EUs largest economy are becoming even more subdued. In parallel, the speed of the spread of electrification in Europe is subject to high uncertainty. All in all, for Hungary, we continue to see annual GDP growth at 2% in 2025, with balanced risks to the upside and downside.