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How Would Coronavirus Affect Hungary’s GDP? Opinions Range from -7 to +2

Ábrahám Vass 2020.06.26.

Like early May expectations, analysts are rather divided about the extent of the economic recession caused by the coronavirus pandemic. While the National Bank is optimistic, most analysts don’t share their positive outlook and expect a downturn for 2020 with a subsequent rebound.

Left-leaning GKI Economic Research is rather cautious. In their analysis published today, they expect a decrease of 5-7% for 2020. This comes after they predicted a downturn between 3-7% back in March. However, the Hungarian government’s economic recovery measures are “modest in international comparison,” according to GKI, and as a result, it’s unlikely that the Hungarian GDP production could exceed last year’s data in the second half of this year (something that would be necessary to achieve the 3%). The average 6% decline assumes a 15% decline in the second quarter and 5% in the second half of the year. The Hungarian economy will probably reach the GDP of 2019 only in 2022, GKI says.

Pro-Fidesz Századvég‘s analysis expects the Hungarian economy to contract by 3.1% this year before it will pick up to 5% in 2021. A Századvég analyst claimed that Hungary’s situation is still much better than the rest of Europe’s, explaining that its growth had been vigorous before the crisis, while the country contained the epidemic successfully.

But the National Bank of Hungary (MNB) is the most optimistic, even predicting growth. “Overall, Hungarian GDP may grow at a restrained pace in 2020. Economic growth is expected to be 0.3–2.0% in 2020, 3.8–5.1% in 2021, and 3.5–3.7% in 2022,” they predict, in a statement published on Wednesday.

Meanwhile, IMF has also become more pessimistic, and compared to their April forecast, they are now projecting a deeper recession in 2020 and a slower recovery in 2021. Global output is projected to decline by 4.9% in 2020 followed by a partial recovery, with growth at 5.4% in 2021. The developed economies will face a stronger downturn (8%), with the euro-zone’s GDP to go down by 10.2% this year and Germany’s (Hungary’s no. 1 export partner) to decline by 7.8% this year and to grow by 5.4% in 2021, according to the Monetary Fund’s analysis.

featured image via Zsolt Czeglédi/MTI