Q3 GDP data once again stronger than expected

HUNGARY - In Brief 14 Nov 2019 by Istvan Racz

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It is the well-known old pattern repeated again. Analysts swear that the economy is now definitely set to slow down markedly, but actual data eventually shows more robust growth than expected. Today's preliminary Q3 GDP growth figures were 1.1% qoq, 4.8% yoy, all on sda basis, marking the strongest (potentially the second strongest if the Irish data comes out later on) expansion yoy, and the second strongest after Poland in qoq terms within the European Union. The yoy rate was moderately down from 5.2% both in Q1 and Q2, but essentially it still indicated the same 5%-ish growth as the one that has been around throughout the last three years. Most recent forecasts, after a series of upward revisions, for full-year 2019 have been 4% from the government, 4.5% from the MNB and 4.6% from the EU as well as from us. But honestly, after 5.1% yoy growth in the first three quarters, it is increasingly difficult to see how on earth the full-year growth number could get down to the predicted levels.Was this a surprise coming completely out of the blue? No, not really, as industrial output jumped by 6.9% yoy, construction output grew by 19.6% yoy, and retail sales rose by 5.8% yoy in Q3, actually all three of them accelerating in September, rather than decelerating as fortune tellers (like us) would have expected on the basis of the weak European business cycle.Surely, this kind of resistance to cyclical weakening will not make the MNB's task in controlling inflation any little bit easier. But it seems the nerves are in pretty good condition in the Monetary Council, and all the signs suggest that the makers of monetary policy will hold on to their loosening bias until there is clea...