Hungary has been in recession since the second quarter of 2008 and last year's decline wiped off the economic growth of the three years prior to 2009.

The fourth-quarter decline was lower than the 7.1% year-on-year drop in the third quarter. Net gains in exports could not offset sharp declines in consumption and investment, which fell 5.7% and 8.1% respectively in the last three months of 2009.

Agriculture production dropped 15.7% in the fourth quarter and 17.5% for the full year. The manufacturing sector lost 7.2% in the final quarter and 16.7% over the whole year.

The detailed breakdown of GDP figures was in line with estimates, but pointed to the disappointing level of capital investments, which does not bode well for short-term growth prospects.

Takarekbank analyst Gergely Suppan expects the economy to emerge from recession in the first quarter and for growth to pick up in the second half, fuelled by rebounding new investments by larger companies. Industrial exports will be the engine for Hungary's economic growth, he added.

Suppan said he anticipates a 0.3% rise in GDP over the year as a whole, as against the official government target of -0.2%.

Equilor analysts expect a protracted recovery, which will be driven by the increase in exports and not by rising domestic demand.

National Bank deputy governor Ferenc Karvalits is also of the belief that it will be a slow and long recovery for Hungary."

Source: Hungary Around the Clock.

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