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Book

Economic Update - Hungary, Romania: Growth to Moderate in 2015

M.: Sberbank CIB, 2014.
Gavrilenkov E., Stroutchenevski A., Konygin S.
Under the general editorship: Gavrilenkov E.
Economic growth. The Hungarian economy continued to perform well in 2Q14, GDP growing 3.9% y-o-y, a bit better than in 1Q14 (3.7%) according to the second reading. However, due to base effects (the economy contracted y-o-y in 1Q13 and 2Q13 was the weakest quarter of 2013 at 0.5%), seasonally and calendar-adjusted Q-o-Q GDP growth decelerated from 1.1% in 1Q14 to 0.8% in 2Q14. Romania's GDP expanded 2.4% y-o-y in 1H14 (3.9% y-o-y in 1Q14 and 1.2% in 2Q14), which looks solid compared with the rest of the EU but not as strong as in neighboring Hungary. Next year, growth is set to moderate in both countries. Investment activity. Hungary's accelerating GDP growth was driven by increased government consumption and investment in production capacity (as well as growing exports), while in Romania, investment and construction contracted. Exchange rates. The Hungarian forint has depreciated moderately this year, a bit more against the dollar and less against the euro. The weaker currency has helped keep Hungarian exports competitive on European markets (around 75% of foreign trade turnover is with EU countries). The Romanian leu has strengthened against the euro, which could explain why the country's economic performance was a bit worse in 2Q14 than earlier in the year.
Economic Update - Hungary, Romania: Growth to Moderate in 2015