Hungarian Parliament building

Hungary GDP Q1 2023

Hungary: The economy contracts at a softer pace in Q1

According to a preliminary reading, the economy shrank 0.2% on a seasonally adjusted quarter-on-quarter basis in the first quarter, following Q4 2022’s 0.6% contraction. On an annual basis, GDP fell 0.9% in Q1, swinging from the 0.4% increase recorded in Q4 2022.

While a detailed breakdown is set to be released on 1 June, the press release highlighted that a downturn in industrial activity was behind the reading, while strong activity in the agriculture and services sectors lessened the decline.

Commenting on the outlook, Peter Virovacz and Dávid Szonyi, economists at ING, stated:

“Going forward, the lack of monthly economic data for the second quarter limits our ability to predict whether the technical recession will continue or not. […] Given sky-high inflation and the depletion of household savings, meaningful domestic consumption in the second quarter seems unlikely. […] Currently, we see a roughly 50-50 chance of the Hungarian economy emerging from the technical recession before the third quarter.”

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