Hungary’s growth rate may reach 6 percent next year, although the value of Hungary’s GDP is likely to fall slightly short of the pre-epidemic level even in 2022.
Capital Economics, one of London’s largest financial and economic research firms, emphasized in its outlook for the wider emerging European region that the Hungarian economy was doing well during last year’s second wave of the epidemic, but it was likely to decline further in the first quarter due to the third wave.
The decline in the first quarter is indicated by the fact that the value of industrial production decreased slightly, while retail sales fell sharply in February.
However, the vaccination program in Hungary is ahead of the rest of the region, and the lifting of restrictions has already begun, so the recovery is expected to start earlier than in other Central European economies, the forecast said. They highlighted that budget support to the Hungarian economy increased at the end of last year, and analysts expect economic policy to remain loose in the run-up to next year’s elections.
Meanwhile, the labor market situation in Hungary remains tight, which supports household consumption, plus Hungary will be one of the main beneficiaries of disbursements from the European Union’s recovery fund. All in all, Capital Economics expects 4 percent GDP growth in 2021 and 6 percent for 2022. However, the value of Hungary’s gross domestic product at the end of 2022 might still be 2 percent lower than before the coronavirus epidemic.
According to the forecast for 2023, the performance of the Hungarian economy may increase by 4.5 percent. The deficit should fall from 8.1 percent to 5.1 percent this year, 4.3 percent next year, and 3.3 percent in 2023. The government’s debt-to-GDP ratio is set to fall from 78 percent to 76.5 percent by the end of this year, 75.5 percent in 2022, and 74.3 percent in 2023, according to the company’s calculations.