EC spring forecast puts Hungary GDP growth at 0.5 percent in 2023

The EC forecast 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, according to the report.

“HICP inflation appears to have peaked at 25.9 percent in 2023-Q1, following the phase-out of the motor fuel price cap in December 2022,” the EC said. “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, the EC said.

“Shortages of skilled workers are expected to persist, exacerbated by population ageing,” it added.

Nominal wage growth is set to remain robust, and real wages are currently declining due to high inflation, but they are expected to rise again as from autumn 2023, the EC said.