Hungary’s GDP fell by 0.4 per cent in the third quarter of 2022 compared with the previous quarter, bringing the Hungarian economy close to a technical recession. GDP is still growing at an annual average rate of 5.2 per cent, but the rate is falling by around 2 percentage points per quarter, with a decline of 1-1.5 per cent expected in 2023.
GKI’s economic sentiment index has been falling for more than half a year
The business confidence index fell slightly further in November after a big drop in October. Con-sumer sentiment, on the other hand, improved slightly, although it remained gloomier than its terrible pessimism of September. According to a survey conducted by GKI Economic Research Co. with the support of the EU, business expectations were similarly negative during the Covid period of early 2021. Consumers were still more pessimistic than they were in the Covid panic of spring 2020. The good news, however, is that the business sector’s willingness to employ slightly strengthened, its intentions to raise prices weakened, while consumers’ fear of unemployment and inflationary expectations also changed in a favourable direction.
Forecast for 2022-23: Recession, accelerating inflation, worsening external balance
GKI’s current forecast was made in a context of even greater uncertainty than usual, and understanding trends was complicated by the sharp change in economic developments in the middle of the year. GKI raised its growth forecast for 2022 from 3.7 per cent to 4.5 per cent, while for 2023 it no longer forecasts a growth of 2.7 per cent, but a decline of around 3.5 per cent.
GKI’s business confidence index fell in October, and the lack of demand was already a bigger problem than the labour shortage in many places
GKI’s economic sentiment index has been falling for six months in October. While in previous months this was mainly due to a fall in the consumer confidence index, in October it was mainly due to a sharp drop in business expectations across all sectors. According to a survey conducted by GKI Economic Research Co. with the support of the EU, business expectations were similarly negative during the Covid period of early 2021.
GKI’s economic sentiment index fell sharply in August
August marks the fourth month of steady deterioration in business and consumer expec-tations. According to the empirical survey conducted by GKI Economics Research Co. with the support of the EU, business expectations fell by around 13 points since April this year, while consumer expectations dropped by nearly 30 points, and the latter also fell most sharply in August. The business confidence index was last at a similar low in spring 2021 and the consumer one in spring 2020, during the panic caused by the Covid pandem-ic restrictions. (For the first time in August, consumers’ opinions may have reflected the impact of the announcement of overhead increases.)