Compared to the first three months of this year, Hungary's economic output this quarter dropped by 0.3 percent, falling for the fourth quarter in a row.
The KSH said the largest contributors to the decrease in economic performance were industry and market services, mainly transportation and storage as well as wholesale and retail trade. On the other hand, the good performance of the agricultural sector offset some reduction.
The data came against the previous forecast of some analysts, who expected a modest growth in this quarte. However, the Ministry of Finance said that it would not restrain the economy from getting back on the path to growth.
"The fundamentals of the economy are stable," the ministry said in a statement, adding that the unemployment rate is one of the lowest in the European Union (EU), while sectors such as agriculture and foreign trade also did well.
The Hungarian economy will return to a growth trajectory in the second half of the year and could perform above the EU average again next year, the statement said.
"Following the release of unfavorable data, despite expected positive figures for the second half, it appears inevitable that a recession is looming for the entire year," Janos Nagy, an analyst at Erste Bank Hungary, said following the release of data.
Leading weekly newspaper HVG pointed at the high inflation rate (17.6 percent in July) as the culprit: "With such inflation, people's money is simply depleting; there's nothing to fuel GDP ... Retail turnover decreased by 12.6 percent in April, 12.3 percent in May and 8.3 percent in June compared to the same months of 2022."
According to official figures, Hungary's economy has shrunk by 1.7 percent year-on-year in the first two quarters.
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