(Adds comments from statistician, analyst.)
BUDAPEST, Nov 14 (Reuters) - Hungary's annual economic growth unexpectedly tumbled in the third quarter as the nation headed towards recession due to worsening export prospects and state budget cuts.
Annual growth slowed to 0.8 percent in the third quarter from 2.0 percent growth in the second quarter, the Central Statistics Office (KSH) said on Friday, based on preliminary unadjusted data. The figure was far below analysts' median forecast of 2.2 percent growth.
"The performance of the (manufacturing) industry and the construction industry, which account for about a third of the GDP, pulled down the figures. Export growth has slowed and domestic industrial sales have fallen," KSH statistician Pal Pozsonyi told reporters.
Hungary has one of the slowest growing economies in central Europe after two years of tax increases and subsidy cuts plus a slowdown in its main export market, Germany, which has already gone into recession.
Hungary's economy is expected to slide into recession next year as export growth is hit by falling demand in western Europe while domestic consumption is expected to drop on falling real wages and a slowdown in bank lending due to the credit crunch.
The global financial crisis has forced Hungarian firms to cut thousands of jobs in the past months and the government to announce public sector spending cuts worth 320 billion forints ($1.48 billion) in 2009 which will further hit domestic demand.
The government announced a large stimulus package on Thursday to help businesses, mainly small and medium sized enterprises, to save jobs as the economy is expected to shrink by one percent in 2009.
Car importers said the crisis could cut new car sales by up to 10 percent this year and more than 10 percent in 2009.
"I think layoffs could affect up to 30 percent of car industry workers," Zoltan Szoke, a trade union leader in the sector, told Reuters earlier this week.
Analysts said the weak third-quarter figure signalled that Hungary's first recession since the hard years following the 1989 fall of communism could come earlier than projected.
"This is the first time (since the early 1990s) that Hungary will see a real downturn in the business cycle and a recession -- not just a slowdown with a smaller growth figure, but shrinking national income," said Gyorgy Barcza, analyst at KBC's Hungarian banking unit K&H Bank.
"Higher unemployment, and corporate defaults ... will make 2009 a painful year for Hungarians," he added. (Reporting by Sandor Peto; editing by David Stamp)