Hungary Economic Forecast

Hungary Economic Outlook

October 5, 2021

The economy expanded at a robust rate in the second quarter, amid an expansionary fiscal stance and easing restrictions. The recovery is expected to have carried over into Q3, albeit at a more moderate pace. Business sentiment strengthened in the quarter, hinting at sustained private sector activity, while consumer sentiment broadly held its ground. In politics, in mid-September the government and social partners reached an agreement to hike the minimum wage by almost 20% in 2022, with small- and medium-sized businesses to receive tax relief in exchange. Moreover, the government announced it will refund USD 2 billion of income tax to families in early 2022, while it also eased repayment rules for some loans under an extended debt moratorium. Meanwhile, in late September Moody's raised Hungary's rating to “Baa2” from “Baa3”, citing the country’s strong growth rebound and outlook.

Hungary Economic Growth

The economy should post strong growth figures this year and next. Resurgent foreign demand should support the external sector, while buoyant investment activity and unleashed pent-up spending amid an expansionary fiscal stance will fuel domestic demand. That said, pandemic-related uncertainty poses a downside risk. FocusEconomics analysts see GDP growing 6.7% in 2021 and 4.9% in 2022, which is unchanged from last month’s forecast.

Hungary Economy Data

2015 2016 2017 2018 2019
Population (million)9.99.89.89.89.8
Economic Growth (GDP, annual variation in %)3.82.24.35.14.9
Consumption (annual variation in %)3.84.94.44.95.0
Investment (annual variation in %)4.8-10.618.717.115.3
Industrial Production (annual variation in %)7.40.94.63.55.4
Retail Sales (annual variation in %)5.94.95.66.86.3
Unemployment Rate6.85.14.23.73.4
Fiscal Balance (% of GDP)-2.0-1.8-2.5-2.1-2.0
Public Debt (% of GDP)76.275.572.970.266.3
Money (annual variation in %)7.59.99.912.59.5
Inflation Rate (HICP, annual variation in %, eop)1.01.82.22.84.1
Inflation Rate (CPI, annual variation in %, eop)0.91.82.12.74.0
Inflation (PPI, annual variation in %)-1.30.53.94.82.4
Policy Interest Rate (%)1.350.900.900.900.90
Stock Market (annual variation in %)43.833.823.0-0.617.7
Exchange Rate (vs EUR)309.9311.5309.3318.8325.3
Exchange Rate (vs EUR, aop)315.5309.2310.8321.2331.1
Current Account (% of GDP)2.34.52.40.0-0.9
Current Account Balance (EUR bn)2.75.22.90.0-1.2
Trade Balance (USD billion)9.510.89.16.65.4
Exports (EUR billion)90.593.0101105109
Imports (EUR billion)81.983.392.699.3104
Exports (annual variation in %)7.02.88.34.13.9
Imports (annual variation in %)4.61.711.27.34.8
External Debt (% of GDP)10696.283.880.573.0

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Hungary Facts

Value Change Date
Bond Yield2.080.0 %Dec 31
Exchange Rate295.1-0.68 %Jan 01

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