Bloomberg News

Hungary’s Economy Expands More Than Forecast on Agriculture

February 15, 2012

Feb. 15 (Bloomberg) -- Hungary’s economy expanded more than economists forecast in the fourth quarter, boosted by rising agricultural production.

Gross domestic product increased 1.4 percent from a year earlier, matching the pace in the previous three months, the statistics office in Budapest said today in a preliminary estimate. The median forecast of 16 economists in a Bloomberg survey was for a 0.9 percent increase. GDP grew 0.3 percent from the third quarter.

“Agriculture was pulling growth and industrial production played second fiddle,” statistician Peter Szabo told reporters in Budapest today. “The construction industry’s stagnation was bizarrely a positive factor after double-digit drops.”

Industrial production, including exports of Audi AG cars and Nokia Oyj mobile phones, had helped Hungary recover from its worst recession in 18 years in 2009. Nokia’s announcement on Feb. 8 that it will cut 2,300 jobs in Komarom, Hungary will have a “negative” impact on first-quarter growth, Szabo said.

The International Monetary Fund may cut this year’s 0.3 percent growth forecast for Hungary because of the euro area’s deteriorating outlook, Iryna Ivaschenko, the lender’s representative in Budapest, said Feb. 9.

Hungary is seeking to revive bailout talks with the IMF and the European Union to quell investor concern about its ability to service the highest debt level among the trading bloc’s eastern members. It sought aid in November as the forint fell to a record low and its credit grade was cut to junk at Standard & Poor’s, Moody’s Investors Service and Fitch Ratings.

The government predicts growth of 0.5 percent in 2012. The economy expanded 1.7 percent in 2011 from the previous year.

--Editors: Andrew Langley, Eddie Buckle

To contact the reporter on this story: Zoltan Simon in Budapest at zsimon@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


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