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2024/03/12 / Erste Group Research

Slower rebound in 2024

The economic rebound stumbled at end-2023, while, according to the latest available statistics, there is no sign of a relevant improvement so far this year. Following the annual GDP decline of 0.9% last year, the economy is set to grow in 2024; however, the rebound should be much slower than earlier thought. We cut our forecast for this year's annual GDP growth to 2%. Uncertainties remain high, as prospects will strongly depend on the timing of any global economic revival. Inflation continued to quickly decline in the last couple of months, and the 12-month headline CPI rate returned to the MNB's tolerance range of 2-4% at the beginning of the year.

Reaching the CPI target is just temporary, however, and inflation rates are set to rise again in 2Q24. This justifies a cautious shift of the monetary policy expected from April. The policy rate could still be reduced to 6.50% by end-June; however, room for the continuation of monetary easing in 2H24 is limited. More cautious monetary policy steps should help in the stabilization of the forint exchange rate, which has become more vulnerable, as a result of declining carry, the worsening balance of trade and increased political noise.

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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-