Research Detail
| 2022/09/13 / Erste Group Research |
More uncertain economic outlook not prevent from further tightening GDP growth was strong in the first half of the year, driven mainly by improving domestic demand. A considerable slowdown is underway, however, as both external and internal growth drivers are losing their momentum. The energy crisis, coupled with high interest rates and fiscal consolidation measures, should hit both households and companies, especially in the last quarter. Although this year's annual GDP growth is set to reach 5% (based on the strong first half's performance), we expect the economy to slow to 0.9% annually in 2023. The mid-term outlook is more favorable, however, thanks to already built-up capacities, supporting a revival of exports. Inflation remains on an increasing path and reaching the peak is still ahead. The headline rate will likely reach 20% in September and would remain above this level until 2Q23. The ultra-high core inflation print indicates strong secondround price pressure, justifying the hawkishness of monetary policy. Rate hikes, coupled with new liquidity withdrawing measures, should continue and short-term rates might increase to 14% by year-end. Thanks to strict monetary policy, we expect the forint to manage to stabilize at stronger levels, but this is conditional on reaching an agreement with the EU and an easing of energy market tensions. |
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General information
| Author | Erste Group Research |
| Date | 2022/09/13 |
| Language |  |
| Product name | CEE Country Macro Outlook |
| Topic in focus | FX, Macro/ Fixed income |
| Economy in focus | Hungary |
| Currency in focus | Hungarian Forint |
| Sector in focus | - |
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