Hungary Economic Forecast

Hungary Economic Outlook

January 11, 2022

GDP growth moderated on an annual basis in Q3, and also weakened in sequential terms amid a notable slowdown in household spending and a decline in exports. Momentum likely remained subdued in Q4, as suggested by available indicators. Both industrial production and merchandise exports were downbeat year-on-year in October, likely restrained by input shortages. Moreover, consumer confidence averaged lower in Q4 than in the previous quarter, amid soaring inflation and the spread of the Omicron variant. That said, business sentiment strengthened in the quarter, while industrial production rebounded in November and Covid-19 infections have dropped since early December amid a fast rollout of the booster shot. Meanwhile, the government recently froze retail mortgage rates for a six-month period from January to protect households from higher borrowing costs—a move which could undermine the Central Bank’s efforts to curb soaring inflation.

Hungary Economic Growth

GDP growth is expected to lose some steam in 2022, although it should remain upbeat. A tight labor market and accumulated savings, coupled with robust public spending, should boost domestic demand. That said, elevated inflation and protracted supply constraints could restrain growth, while uncertainty over the pandemic and EU funds poses a downside risk. FocusEconomics analysts see GDP growing 4.8% in 2022, which is down 0.1 percentage points from last month’s forecast, and 3.8% in 2023.

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 (CPI, annual variation in %, eop)0.91.82.12.74.0
Inflation Rate (HICP, annual variation in %, eop)1.01.82.22.84.1
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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