The Organization for Economic Co-operation and Development (OECD) raised Hungary’s economic growth forecast for this year to 6.0 percent from 4 percent in its previous report in June, but lowered its 2023 forecast to 1.5 percent from 2.5 percent in its latest economic forecast released on Tuesday.
The slowdown in growth in 2023 was explained by the economic fallout from the Russia-Ukraine war, moderate external demand, and slower growth in household consumption due to shrinking real wages.
The OECD has also revised down its inflation forecasts for 2022 and 2023, from 10.3 and 7 percent in June, to 13.5 and 12.7 percent respectively.
The unemployment rate may be lower this year at 3.5 percent, down from the summer forecast of 3.8 percent,
but the revised data suggest it could rise to 4.7 percent next year, one percentage point higher than in the previous report.
In its June forecast, the OECD projected that the budget deficit-to-GDP ratio could fall from 5.5 percent to 5.4 percent in 2022, from 2022 to 2023, while Tuesday’s forecast now projects deficits of 6.2 percent and 5.6 percent, respectively. The current account deficit could narrow from 5.6 percent of GDP this year to 4.6 percent next year, 0.6 and 1.2 percentage points higher than the June forecast.
The Hungarian economy is resisting the adverse effects of war and sanctions, as it grew by 4.1 percent in the third quarter and 6.1 percent in the first nine months of the year, above expectations,
Hungarian Finance Minister Mihály Varga announced last week in a video message posted on his Facebook page.
It is also worth mentioning that the Hungarian tax system has received prestigious international recognition, as Hungary has moved up to seventh place in the EY tax competitiveness ranking, the Minister said earlier. Hungary had also overtaken countries such as Germany, Austria ,and the United States of America in the ranking of the international tax consultancy.
In their report, they highlighted that Hungary has the lowest corporate tax rate among the Organization for Economic Cooperation and Development (OECD) countries, and the 15 percent flat-rate personal income tax was also seen as a strength, the minister added.
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