THE MACROSCOPE REPORT HUNGARIAN ECONOMIC OVERVIEW Q2 2024
HUNGARY AND THE GLOBAL BUSINESS CYCLE The dominant global trend for a year and a half now has been that the manufacturing industry is performing poorly. This pattern particularly adversely affects the economy of those countries in which industry has a higher-than-average share, such as Hungary. That is one reason why the Hungarian economy has difficult times nowadays. However, there are signs from which optimistic observers could conclude that a slow turnaround in manufacturing may unfold from the second quarter of 2024 onwards.
In the last quarter of last year, the Hungarian economy managed to avoid recession for the first time in a year and a half, both quarterly and annually, albeit the growth on an annual basis was only half a percent, and quarterly, there was stagnation. In 2023, the gross domestic product decreased by 0.7% for the year compared to 2022 (adjusted for working days). Agriculture contributed positively to growth by 2.1 pp, so without agriculture, the decline would have been close to 3%. Industry resulted in a 1 pp drop in GDP, the construction industry’s negative contribution to the GDP was 0.3 pp, while the contribution of services was -0.8 pp. This was provided fully by trade, accommodation services and catering. Other service sectors’ performance was mixed: information and communication and real estate affairs were positive (+0.1 pp each) alongside public sector activities (public administration, defense, mandatory social insurance, education, human health, social care). Services performed particularly poorly in the second and third quarters (-1.5 and -1.6 pp contributions to economic growth, respectively). Household consumption expenditure, investments and inventory changes were deeply in the red. These were somewhat compensated by the positive GDP contribution of net exports of 4.9 pp. 1