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Hungary in slight recession for a full year

August 18th, 2023

A liberal analyst paints a mixed picture of the state of the Hungarian economy, with positive alongside negative developments.

The Central Statistical Office reported a 0.3 GDP drop in the second quarter compared to the first, which means that Hungary has technically been in recession for the fourth consecutive quarter. That has never happened since 1995, when quarterly growth statistics were introduced. Márton Nagy, the cabinet minister for economic development, said that trend will be reversed in the third quarter. Despite the 2.3 percent drop year-on-year in the second quarter, he said, Hungary will be out of recession by the end of the year (instead of a 1.5 percent growth as forecast in January).

On Telex, Gábor Brückner writes that negative growth is accompanied by a few favourable trends. Shrinking consumption has already reduced the record inflation rate, and single-digit inflation can be expected by November. Lower energy prices and the drop in living standards, he continues, have greatly improved the country’s foreign trade balance. Although the public deficit is shrinking, Brückner finds it improbable that the government will manage to bring it down below 4 percent this year, as planned.

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