Customers will have more money to spend, but the economy is still not out of the crisis

By: Trademagazin Date: 2024. 05. 20. 11:50

This year, several new economic forecasts indicate that the Hungarian economy will achieve or even exceed regional growth averages, and the increase in real wages will once again enable consumption growth. However, there are expected challenges in state management.

According to fresh forecasts from the European Bank for Reconstruction and Development (EBRD), the European Commission, and the Equilibrium Institute, Hungary’s GDP is expected to grow by 2.2-2.4% this year and 3.1-3.5% next year. Inflation rates this year are expected to be 4.6% according to the Equilibrium Institute and 4.1% according to the European Commission, decreasing to 3.1% and 3.7% next year, respectively.

It is important to note that the Hungarian government originally expected a 4% growth this year but revised this forecast to 2.5% in April, supported by local forecasts.

Consumption by households and investments will be the drivers of growth. According to the Equilibrium Institute, these factors will propel Hungarian economic growth. The European Commission anticipates that the labor market demand and real incomes will increase in 2024 and 2025 due to the economic recovery.

According to the EBRD’s forecast, this year’s growth in Hungary will exactly match the average of the Central European and Baltic states group, but the European Commission places Hungary behind only Poland and Croatia in the region.

However, not all news is good; the European Commission expects Hungary’s GDP-related state debt ratio and budget deficit to increase in 2024, potentially leading to an excessive deficit procedure.