GKI Gazdaságkutató Zrt. 2023/3. forecast for 2023

The GKI already predicted a 0.5% decline this year from the beginning of 2023, and it did not change this in September, although according to its assessment, the chance of a larger decline is now somewhat higher than a smaller one. -0.5% was previously considered a very pessimistic forecast, but now more and more analysts believe that this year’s GDP decline is likely, and now the government has also admitted that the planned 1.5% growth is hopeless, even positive zero would be a good result. GKI reduced its growth forecast for 2024 to 2.2% (2-2.5%) (from the previous 2.5%). The reason for this is that the arrival of significant amounts of EU transfers is no longer expected this year, and is questionable next year as well; moreover, in September the government decided to cut back on investments again, and then put more into perspective; furthermore, this year’s and next year’s budget also needs to be adjusted, and the European economy, including Germany and Hungary, looks worse than previously expected. It is true that next year’s 2% rise in consumption (after this year’s 1.5% drop), Hungarian exports, among other things due to the good agricultural harvest and the turning of some battery investments into production, are relatively favorable. However, these can only curb the impact of the continuation of the investment decline (-2% after this year’s -10%). At the same time, especially if the inflow of EU transfers does not start, there is also a considerable chance of lower growth. Due to the weakness of domestic demand, the Hungarian economic path will be export-oriented this year and next. The average annual unemployment after 3.6% last year will be 3.9% this year and 3.8% next year.