(Bloomberg) -- Hungary’s economy grew less than forecast in the first quarter, confirming a slow recovery from a recession that’s weighing on a dire budget outlook. 

Gross domestic product rose an annual 1.1% in the January-March period after no growth in the fourth quarter and a three-quarter recession before that, the Budapest-based statistics office said on Tuesday. The median estimate in a Bloomberg survey was for 1.3% expansion. GDP grew 0.8% from the fourth quarter.

Prime Minister Viktor Orban’s government has downgraded its economic growth forecast to an annual 2.5% for this year from 4%, forcing a budget adjustment after the shortfall reached the full-year target already in the first quarter.

Earlier this month, the cabinet said it would postpone about 675 billion forint ($1.7 billion) in state-funded investments to meet its upwardly revised deficit goal of 4.5% of GDP for this year. The adjustment, if executed, is only expected to plug about the half of the fiscal hole needed to reach the deficit goal. The original shortfall target for this year was 2.9% of GDP.

A drop in industrial output restrained economic growth in the first quarter, which was otherwise supported by services, especially real estate deals and the IT sector, the stats office said.

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