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Hungary The recent slowdown in activity is expected to continue in early 2023. Real GDP is projected to stagnate in 2023, before rebounding by 2.5% in 2024. High inflation, high interest rates and low confidence will weigh on consumption and investment in 2023. Inflation is projected to decrease significantly after mid-2023. As it recedes, growth is expected to strengthen. The recession and its tepid recovery relative to the past will cause unemployment to increase slightly. Monetary policy is expected to remain restrictive and fiscal policy will tighten in 2023, both of which will help to contain inflation. Reducing the budget deficit and reaching an agreement on the delivery of EU funds will be key to maintain investor confidence and create fiscal space to finance the green transition. Productivity growth should be raised by accelerating the digitalisation of the economy, fostering competition in product markets, and strengthening labour mobility. The economy is slowing The economic slowdown that started in the second half of 2022 is expected to continue in the first half of 2023. At 24.0% in April 2023, headline inflation has peaked, but this is not yet the case for core inflation, defined as excluding food and energy (at 17.1% in April). High inflation is eroding household purchasing power and consumption, while tight financial conditions and economic uncertainty are holding back investment. Quarter-on-quarter GDP growth in 2023Q1 was -0.3%, which is the third successive quarter of negative GDP growth.
Hungary
Source: OECD national accounts database; OECD Consumer Prices database; and OECD calculations. StatLink 2 https://stat.link/r35djo
OECD ECONOMIC OUTLOOK, VOLUME 2023 ISSUE 1: PRELIMINARY VERSION © OECD 2023