Hungary exits recession in first quarter this year

Hungary emerged from recession in the first three months of the current year, when the economy expanded by a better-than-expected 0.9 per cent, official provisional data showed yesterday.

"According to seasonally and calendar-adjusted data, gross domestic product (GDP) increased by 0.9 per cent as compared to the previous quarter," the statistics office KSH said in a statement.

Analysts had been projecting a further contraction in GDP of 0.1-0.3 per cent and had been forecasting a return to growth only in second or third quarters.

On a 12-month basis, the economy grew by a marginal 0.1 per cent in the period from January to March.

However, the data were still only provisional and final data - to be published on June 9 - "may differ from the ones published in this flash estimate," KSH cautioned.

Hungary entered a deep recession at the end of 2008 and the economy shrank by 6.3 per cent in 2009.

The statistics office gave no details or any breakdown of the preliminary GDP estimate, so it was not yet clear exactly what was driving the surprise growth.

But experts pointed to stronger-than-expected first-quarter growth in Germany, which is Hungary's main trading partner.

Hungary may also be starting to reap the benefits of the draconian belt-tightening measures prescribed by the previous government as one of the conditions for the €20-billion financial bailout by the International Monetary Fund and the European Union at the end of 2008.

Thanks to the drastic austerity measures, the Socialist administration under ex-premier Gordon Bajnai succeeded in curbing the public deficit, bringing it down to four per cent of GDP in 2009 from more than nine per cent in 2006.

But it was precisely the unpopularity of the cost-cutting measures which led to the ousting of the Socialists in the general election earlier this year.

And the opposition centre-right party Fidesz and its leader Viktor Orban, who won a two-thirds majority, have yet to present the details of their economic programme.