Hungary’s economy contracted for the first time in more than two years in the first three months of the year as the European debt crisis sapped demand for Hungarian exports, the engine of the country’s economy.
Gross domestic product fell 0.7 percent from a year earlier, declining for the first time since the last quarter of 2009, after a 1.4 percent expansion in the last three months of 2011, the Budapest-based statistics office said today. GDP dropped 1.2 percent from the previous quarter compared with a preliminary figure of a 1.3 percent decline.
Hungary is seeking to revive bailout negotiations with the International Monetary Fund and the European Union to cut financing costs and bolster investors’ confidence at a time when commercial banks curb lending, raising the risk of a credit crunch, the central bank said last month. The government estimates 0.1 percent economic growth this year, while the European Commission predicts that GDP will shrink 0.3 percent.
“Nearly half of the sectors in the economy stagnated in the first quarter,” the statistics office said, adding that the expansion of industrial output, which drove growth in the past two years, came to a halt. Industrial output helped GDP decline 0.1 percent in the period, it said.
Industrial output unexpectedly plunged an annual 3.1 percent in April as mobile phone and television production continued to fall, data published yesterday showed.
Agriculture output fell 7.8 percent from a year earlier, shaving 0.2 off the GDP figure, the statistics office said. Household consumption spending declined 0.7 percent from the year-ago period.
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