Tariffs, secondary tariffs and Q2 GDP

HUNGARY - In Brief 29 Jul 2025 by Istvan Racz

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The preliminary Q2 GDP data is due tomorrow. Following -0.2% qoq, -0.4% yoy in Q1, Portfolio.hu's analyst poll shows a median forecast of 0.2% qoq, 0% yoy for Q2, with 0.7% average growth for this year and 2.7% growth for 2026. A short while ago, our quarterly forecast update included a slightly more optimistic 0.5% qoq, 0.3% yoy prediction for Q2, with the same 0.7% prediction for 2025 as a whole and a somewhat pessimistic-looking 1.6% for 2026. Curiously, the Economy Ministry released their new GDP forecast this morning, expecting 0.3% qoq, 0.1% yoy growth for Q2, 1% (rather than the previous 2.5%, built into the 2026 government budget) for 2025 as a whole and 3.1% for 2026. Somehow we have the impression that the Ministry must know a bit more about the likely Q2 actuals from KSH than anyone else, or otherwise they would probably not take the risk of making a big mistake on their Q2 forecast, just one day ahead of KSH releasing those actuals. But anyway, it looks like everyone (meaning all polled analysts and the government) expects marginally positive GDP growth to come out for Q2, on recovering construction and some stabilisation of industrial output, returning from the negative territory visited in the previous quarter. The main risk of all these forecasts is the lack of knowledge on just how weak agricultural value added may have been in Q2. An element of apparent disagreement between us and the rest of the forecasting community is that we are much less sanguine than others regarding the expected pickup in 2026, mainly because we appreciate the government's lack of ability to loosen fiscal policy in the election year, as rating agencies keep watching ominously. A...