Hungary flag Hungary: Economic outline

Economic Outline

Economic Indicators

Resuming the trends observed in recent years, Hungary's GDP rebounded sharply after the softening of the COVID-19 pandemic. Nevertheless, the country’s economy contracted for four consecutive quarters from mid-2022 to mid-2023 due to high inflation, tighter fiscal and monetary policies and sluggish external demand. Despite resuming growth in Q3/2023, the IMF estimated a contraction of 0.3% of GDP for the year as a whole. Projected real GDP growth is expected to increase to 3.1% in 2024 and further rise to 3.3% in 2025. The consumption growth is anticipated to be sustained by the recovery of real income and a reduction in precautionary savings. While construction investment is forecasted to be limited due to fiscal consolidation and elevated interest rates, significant FDI in manufacturing is anticipated to stimulate machinery investment.

The public finances for 2023 have notably fallen short of the budgeted target, primarily due to a decrease in consumption tax revenues, with increased expenditure driven by inflation-related spending and higher interest payments. Therefore, the public budget deficit stood at 4.6% of GDP. Amid the positive trends in the macroeconomic landscape, the anticipation of reduced energy costs, planned decreases in capital expenditure, and the delayed recapitalization of the central bank, the projected deficit is expected to persist at 3.5% of GDP in 2024 and 2.6% in 2025 (IMF). In light of high inflation, the debt-to-GDP ratio decreased to 68.7% by the end of 2023 (from 73.3% one year earlier), still above the pre-pandemic level. However, consolidation is expected to decelerate afterwards due to ongoing high deficits and slower nominal GDP growth, with the debt ratio decelerating at a slower pace (65.7% of GDP in 2024 and 64.1% in 2025 as per the IMF). Inflation remained in double digits in 2023 (17.7%), but should gradually decrease in 2024 and 2025 (6.6% and 4.3%, respectively) due to base effects, lower commodity prices and weak consumer demand, albeit high wage growth is expected to keep service inflation persistently high.

Employment demonstrated resilience last year, with companies hesitant to reduce their workforce amid ongoing labour shortages. Unemployment stood at 3.9% in 2023 and is expected to remain relatively stable in the forecast horizon. The tight labour market is poised to support elevated nominal wage growth, with an additional boost anticipated from a projected double-digit increase in the minimum wage in 2024. Overall, GDP per capita in Hungary was estimated at USD 43,601 in 2023, still below the EU average (USD 56,970 – IMF).

Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 178.12212.61223.41240.12254.15
GDP (Constant Prices, Annual % Change) 4.6-
GDP per Capita (USD) 18,38422,14723,31925,12826,662
General Government Balance (in % of GDP) -7.2-6.3-4.6-4.0-3.0
General Government Gross Debt (in % of GDP) 73.973.474.773.472.4
Inflation Rate (%) 14.617.
Unemployment Rate (% of the Labour Force)
Current Account (billions USD) -14.650.56-0.41-0.66-0.79
Current Account (in % of GDP) -8.20.3-0.2-0.3-0.3

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

Monetary Indicators 20162017201820192020
Hungarian Forint (HUF) - Average Annual Exchange Rate For 1 GBP 380.11353.19360.51363.38394.87

Source: World Bank, 2015


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Latest Update: July 2024