Hungary Economic Forecast

Hungary Economic Outlook

September 8, 2020

The 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 Growth

The 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%.

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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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