Research Detail
| 2023/09/08 / Erste Group Research |
Start of slow recovery ahead, amid remaining hawkish stance of monetary policy We expect GDP to decline by 0.6% annually in 2023. In 1H23, all economic sectors contributed negatively to growth, except for agriculture. On the final use side, the biggest negative contributor to growth was investments, while the decline of consumption ultimately proved a bit milder than expected. The positive contribution of net exports protected the economy from an even bigger fall, however. A slow revival is set to start from 3Q23 onward and FY annual economic growth should be 3.2% in 2024, on the back of lower inflation, normalization of interest rates and a more supportive external environment. Inflation slowed to 16.4% y/y in August. A single-digit inflation rate is reachable by year-end, thanks primarily to the supportive base effect. Nevertheless, the upward risks on inflation have remained in the mid-term, amid the changed global environment and permanent tightness of the domestic labor market. The inflation target band is to be reached only in 2025. As a result, the monetary policy should preserve its hawkishness in order to protect the stability of the forint and keep inflationary expectations under control. The normalization of still high rates is to continue, but positive real interest rates will be maintained in the medium term. |
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General information
| Author | Erste Group Research |
| Date | 2023/09/08 |
| 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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