Research Detail
| 2023/12/20 / Erste Group Research |
Economy to slowly recover on the back of domestic demand We expect the economy to decline by 0.6% annually in FY23. The main culprit behind the weak performance is the huge negative contribution of domestic use (investments and consumption) to GDP. Prospects for 2024 are more promising, however. The carryover effect from this year will be supportive, industry is to improve, while further moderation of inflation and the continuation of wage outflow could help the recovery of consumption. The weakness of the external environment remains a risk to the growth outlook, however. In 2H23, the disinflation process accelerated. The continued decline of headline inflation was mainly supported by the base effect, easing of energy and food prices, stabilization of the HUF and weak consumer demand. The year 2024 is to bring other challenges on the disinflation front, as the supportive role of the base effect fades away next spring, while domestic demand improves. After merging the policy rate and the effective rate at 13%, monetary easing continued in 4Q23. In December, the policy rate was cut to 10.75%. In line with the stalling disinflation, the rate-reduction strategy may somewhat change in spring, as well. |
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General information
| Author | Erste Group Research |
| Date | 2023/12/20 |
| 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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