End of the century: after this year’s slight decline, the economy may expand next year

In the next period, several factors may influence Hungary’s economic performance. The slow growth of the Eurozone can support Hungarian export performance to a moderate extent. The continuation of this year’s disinflation can mainly support the expansion of consumption from 2024. A downside risk is the persistence of uncertainty caused by the Russian-Ukrainian war, they wrote.

In Hungary, consumer prices rose by 14.6 percent in 2022. Inflation peaked at the beginning of this year, and in October the indicator dropped below 10 percent. According to Századvég, with the trend-like decrease in inflation, the average rate of monetary deterioration could be 17.7 percent in 2023, 5.9 percent in 2024, and 3.7 percent in 2025.

This year, the Magyar Nemzeti Bank committed itself to reducing the benchmark interest rate: in September 2023, the benchmark interest rate reached the level of the base rate, which has since been reduced by the central bank in several steps. A gradual relaxation of monetary policy is expected in the following years, and inflation may return to the central bank’s 3.1 percent target range in 2025, they wrote in their forecast.