Hungary Economic Forecast

Hungary Economic Outlook

June 7, 2022

The pace of annual GDP growth accelerated in Q1 2022, as activity was underpinned by robust consumer spending amid a tight labor market and soaring wages, while fixed investment posted a faster increase. Moreover, exports recorded a healthy expansion. The rate of economic growth should moderate in Q2, partially due to a waning low base effect. Inflation spiked further in April, sending consumer sentiment plunging in May, which will be weighing on household spending. That said, business confidence was higher on average in April-May than in Q1, pointing to healthy investment. However, the introduction of a temporary windfall tax on banks’ and companies’ profits—to rein in the public deficit—stirred investor concern and lead to stock market losses in late May. Moreover, the government recently assumed emergency powers because of the Russia-Ukraine war, allowing it to rule by decree.

Hungary Economic Growth

The economy is set to expand solidly this year, although the pace of growth will slow amid a fading low base effect. Strong wage growth, a tight labor market and pent-up spending will buttress the economy, although soaring inflation will eat into private consumption. The prolongations of the war in Ukraine and of supply bottlenecks pose downside risks. FocusEconomics analysts see GDP growing 3.8% in 2022, which is up 0.1 percentage points from last month’s forecast, and 3.3% 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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