ECO ECONOMY-Hungarian and Romanian second-quarter GDP shines but Polish data bodes ill

By Kristina Than

BUDAPEST, August 17 (Reuters)The economies of Hungary and Romania both grew at a faster than expected pace in the second quarter, signaling that Central European economies still had momentum in April-June, propelled by industries and consumer demand .

JThe Polish economy PLGDP=ECIthe largest in the region, rose 5.3% year-on-year, but that was below a Reuters poll’s growth forecast of 6.3%.

And Poland’s seasonally adjusted GDP fell 2.3% quarter-on-quarter, indicating that a slowing domestic demand, rising interest rates and soaring business costs amid double-digit inflation hstarted to slow down growth.

This is should lead to a sharp slowdown or even a recessionnot. Economists point to the risk of a “technical recession”, i.e. two consecutive quarters of contraction, this year in Poland.

“Throughout 2022, GDP growth will not turn negative, but there is a good chance that the annual dynamics will be negative at the start of 2023,” said Piotr Bielski, a leading economist at Santander Bank Polska, who said disappointing second-quarter numbers didn’t bode well for the outlook.

The Hungarian economy HUGDPP=ECI rose 6.5% a year in the second quarter, above analysts’ forecasts for a 6.1% expansion, while on a quarterly basis the pace of growth slowed to 1.1% from 2, 1% in the first three months.

GDP growth was driven mainly by industry and services, with the fall in production in the agricultural sector having dampened growth.

The neighboring Romanian economy ROGDPF=ECI rose 5.3% year on year in the second quarter, also above market expectations of 3.5%.

Erste Bank said in a research note: “Assuming no significant data revisions, even if the economy stagnates in the second half of the year, (Romanian) GDP growth for the whole year is expected to reach 7.0%”.

Despite some ppositive Q2 GDP figures, signs of slowdown are clearly visible across the region.

Manufacturing surveys earlier this month showed that a slowdown in manufacturing in the Czech Republic and Poland worsened in July.

“We expect a substantial slowdown (in Hungary) over the next few quarters, partly due to base effects and also the negative impacts of the war (in Ukraine),” Gergely Suppan, an analyst at Magyar Bankholding, said in a statement. note.

“As a base case, we don’t expect a technical recession, but it can’t be ruled out entirely.”

Suppan said the Hungarian economy could grow by 5.7% this year. Jhe National Bank of Poland forecasts GDP to grow by 4.7% in 2022 and 1.4% in 2023.

The Czech economy also maintained its growth in the second quarter, helped by domestic request.

But high inflation is starting to hit as people’s purchasing power declines. A sharp slowdown in retail sales and plummeting confidence indicators showed that the cost of living crisis has caught up with the eastern wing of Europe.

(Reporting by Krisztina Than; Additional reporting by Anna Koper in Warsaw Editing by Toby Chopra)

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