First reaction to this morning's report of horrendous preliminary Q3 GDP data

HUNGARY - In Brief 30 Oct 2024 by Istvan Racz

---

First the facts: Q3 real GDP growth on sda basis was reported by KSH as -0.7% qoq, -0.7% yoy, implying +0.7% yoy growth in the first three quarters of 2024. This was by 0.6%-point qoq, 1.1%-point yoy below the median analyst expectation (and even more below our own forecast, which happened to be on the wrong side of the consensus this time, as we specifically confirmed in yesterday's note). On the structure, KSH said only that agriculture, industry and construction together reduced yoy GDP growth by a total of 2%-points. The latter implies about 6-7% yoy decrease of value added in these three sectors together, but no further hint is offered by KSH on how that may have been shared by the individual sectors taken together by them this way. In addition, the asymmetric deviations of the qoq and yoy growth rates from analyst forecasts are stemming from the fact that KSH significantly revised their data downwards for previous periods.   Well, this is certainly awful, as it means the economy is now in technical recession, and also that it went more into the red in Q3 then in Q2, when GDP fell by 0.2% qoq in real terms. Some initial reactions were suggesting that the economy minister already warned of these numbers a few days ago. But no, he still hinted at the prediction of 1-1.5% annual growth for 2024, which appears to be pretty much out of line with what KSH said this morning. On that basis, annual growth deeply below 1% or even close to zero appears much more likely. For sure, these results are raising the likelihood of increased pressure on the MNB to loosen policy, whatever they have said until now; it is no great surprise the forint fell to EURHUF 407-408 in morning tr...