Hungary Economic Outlook
September 8, 2020The pandemic and its associated containment measures dealt an unprecedented blow to the economy in Q2. Restrictions that were largely kept in place until May crushed household spending and fixed investment. Moreover, lockdowns abroad weighed heavily on foreign demand, hitting Hungary’s export-oriented industrial sector. Turning to Q3, recovering but still downbeat business and consumer confidence point to some improvement in economic conditions. On the fiscal front, however, in the first seven months of the year the budget deficit overshot the full-year target, amid higher infrastructure spending and stimulus measures. Meanwhile, the government closed the borders to foreigners on 1 September, which will hit the tourism industry. That said, an expected rebound ahead prompted Fitch Ratings and S&P Global Ratings to affirm the country’s BBB rating with a stable outlook in mid-August.
Hungary Economic GrowthThe economy is set to shrink markedly this year, hammered by lockdown measures and disrupted global value chains. Consumer spending will fall due to rising unemployment and heightened uncertainty ahead, which will also hurt investment activity. Counter-cyclical fiscal and monetary policies should cushion the economic impact somewhat, however. FocusEconomics analysts see GDP contracting 5.3% in 2020, which is down 0.5 percentage points from last month’s forecast. For 2021, the panel sees GDP growth at 4.6%.
Hungary Economy Data
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Hungary Economic News
September 12, 2020
According to a second estimate by the Statistical Institute, industrial output declined 7.7% in year-on-year, working-day adjusted terms in July, which was markedly softer than June's 12.2% dive and matched the first estimate. The softer drop was mainly driven by a weaker contraction in manufacturing production, although it still continued to shrink at a marked pace.
September 8, 2020
Consumer prices were unchanged from the previous month in August, down from July's 1.10% jump.
September 4, 2020
Industrial output decreased 7.7% year-on-year in July (June: -12.2% yoy), according to a preliminary estimate.
September 1, 2020
A second GDP release published on 1 September confirmed that GDP collapsed 13.6% year-on-year in the second quarter as a result of Covid-19 and associated restrictions, contrasting the 2.2% expansion recorded in the previous quarter and marking the worst reading on record. Looking at the details of the press release, domestic demand was severely hit by the strict containment measures enacted in late March and kept in place for the most part until May.
August 25, 2020
On 25 August, the Monetary Council of the Hungarian National Bank (MNB) decided to keep the base rate unchanged at an all-time low of 0.60%, following the 15-basis-point cut delivered in the previous July meeting, and held all other instruments steady.