Positive Forecasts for the Hungarian Economy

The European Commission expects Hungarian inflation to fall to 4 percent next year, and the European Bank for Reconstruction and Development (EBRD) has also improved its forecasts for the performance of the Hungarian economy this year and next.

The EBRD has upgraded its forecast for the Hungarian economy’s performance this year and next. The London-based bank predicted in its Tuesday report that real growth in Hungary will be 0.4 percent in 2023, and 3.5 percent in 2024.

The EBRD revised its estimate for Hungarian GDP growth this year by 0.6 percentage points and next year’s growth forecast by a full percentage point. It noted that although EU payments – mainly the Recovery and Resilience Facility funds – are likely to be expected only from the end of 2023,

the Hungarian economy’s growth will still be supported by foreign direct capital inflows and other private capital investment.

Hungary’s GDP contracted, and inflation increased in the second half of 2022, the European Commission (EC) revealed in its spring forecast, according to MTI. The EC forecasts Hungary’s annual GDP growth to slow down from 4.6 percent in 2022 to 0.5 percent in 2023, and then pick up to 2.8 percent in 2024. “HICP  – Harmonised Index of Consumer Prices – inflation appears to have peaked at 25.9 percent in the first quarter of 2023, following the phase-out of the motor fuel price cap in December 2022,” the EC stated.

“The inflation rate is set to ease in the subsequent quarters, driven by base effects, lower commodity prices, the recent currency appreciation, and weak consumer demand,” it added. The EC projected that the annual average inflation rate is to increase from 15.3 percent in 2022, to 16.4 percent in 2023, and then drop to 4.0 percent in 2024. The budget deficit remained high at 6.2 percent of GDP in 2022, and it is projected to decrease to 4.0 percent this year and to 1.5 percent in 2024, according to the EC.

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