GDP, just as inflation, surprises on the upside

HUNGARY - In Brief 15 Feb 2022 by Istvan Racz

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Real GDP growth for Q4 2021 came out at 2.1% qoq, 7.1% yoy on seasonally and day-adjusted basis in first reading today, making the annual growth rate the same 7.1% for 2021, after -4.9% in the Covid-hit 2020. The analyst expectation was 1.3% qoq, 6.9% yoy for Q4. Growth actually accelerated in Q4, from 0.9% qoq, 6.5% yoy in the previous quarter, but to be fair, it also needs to be mentioned that some upward revisions made to earlier data also contributed to the positive surprise. An important part of the big picture was an excellent construction output number for December (+27.2% yoy), also reported this morning. Apparently, a forceful recovery of construction industry output was reinforced by heavy capital spending by the government towards the end of last year. In addition, the Stat Office said that the biggest contribution to GDP growth came from market-based services in Q4 and 2021. Apart from this comment, no details have been shared on the structure of GDP supply and demand on this occasion.Actually, we see an element of smart expectation management here. Around mid-November, the Finance Ministry still expected 7.5% GDP growth for the year, and then it reduced its forecast to 6.4%, and it is against the latter figure that the authorities are coming forward with a great positive surprise now. Anyway, the speed of the recovery has been spectacular, to a great extent thanks to the fact that Covid restrictions were very mild throughout 2021. The Covid order resembled pretty much what truckers in Ottawa are aiming to achieve currently, and it worked quite well, except that Hungary lost some 30k people (over 0.3% of the population) to Covid last year. But everything ha...