Research Detail
| 2024/09/23 / Erste Group Research |
Hungary: Chasing growth Domestic demand is a crucial part of the GDP growth: households’ consumption and investments account for 85 percent of GDP in Hungary. Increasing wealth of households has supported the growth. Further, strong investment activity means the expansion of those capacities that maintain the positive contribution of industrial exports to GDP. In 2022, the outbreak of the Russian-Ukrainian war and the energy crisis turned into an inflationary and an exchange rate crisis in Hungary, eroding consumer and business sentiment. The key rates must have been raised to 18 percent and kept at this level for more than a half year. Low sentiment, high inflation and rates pulled relevantly back the performance of the real economy in 2023. Hungary was in a mild recession that year (sadly as the only country in the region) that was primarily driven by the plummeting domestic demand. Households have recovered only partially from the 2022 energy and inflation shock as private consumption growth ticked up. Worryingly, investment activity remains subdued dragging the growth and the recovery. Actually, Hungary is the only country where investment growth declined since the pandemic making us curious about possible reasons of such development. |
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General information
| Author | Erste Group Research |
| Date | 2024/09/23 |
| Language |  |
| Product name | CEE Economies Special Report |
| Topic in focus | FX, Macro/ Fixed income |
| Economy in focus | Hungary |
| Currency in focus | Hungarian Forint |
| Sector in focus | - |
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