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2022/11/28 / Erste Group Research

Financial stability to remain the focus amid worsening economic outlook

In 2022, GDP may grow by around 5% annually, mainly thanks to the outstanding performance seen in the first half of the year. The third quarter, however, already brought a slowdown in the yearly GDP figure and a mild quarterly drop. The economy may further plummet on the quarterly level in 4Q22 and 1Q23. High energy prices will to a larger extent hit both domestic demand and industry in the above-mentioned quarters. We should see a revival from 2Q23 onwards, however, as on the annual level, the economy should only stagnate next year at best, and is set to regain its momentum only in 2024.

Inflation will remain on an increasing path until the spring months. The annual average inflation rate is set to reach 16% in 2023. The hawkishness of the monetary policy is to remain; according to the MNB's forward guidance, tight monetary conditions will be maintained over a prolonged period. We do not expect a cut of the policy rate until end-June next year. The commitment to strict monetary policy managed to curb the uncontrollable weakening of the forint in mid-October. However, the remaining uncertainties surrounding EU deals have kept the domestic currency rather vulnerable.

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General information

AuthorErste Group Research
Product nameCEE Country Macro Outlook
Topic in focusFX, Macro/ Fixed income
Economy in focusHungary
Currency in focusHungarian Forint
Sector in focus-


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