Hungary's second quarter contraction driven by industry and farming

The contraction of Hungary's economy in the second quarter came on the back of weak industrial and farming output which held back a household-led recovery, updated statistics office data showed on Tuesday.

Economic output dropped by 0.2 per cent quarter-on-quarter and grew by 1.5 per cent year-on-year, Hungary's Central Statistics Office (KSH) said. This was unchanged from preliminary figures and confirmed the economy's fastest annual growth since the third quarter of 2022.

Central Europe's economies are on the mend after the inflation surges of recent years hammered households, although manufacturers in the region are still facing smaller order books amid weak demand from their biggest trade partners in Europe.

The statistics office said industrial output fell by 2.4 per cent year-on-year while farming fell by an annual 5.2 per cent. Construction output rose, it said. Household final consumption increased 4.2 per cent on the year.

Hungary's Economy Ministry said after preliminary data in July that economic growth in the second quarter was lower than previously expected due to external factors.

The Hungarian data follows Czech and Polish updated releases that showed household consumption playing key roles in growth, with the latter's economy growing at its fastest year-on-year pace in almost two years.