Negative prospects for next year: terrible price rises will continue in Hungary

The International Monetary Fund’s new forecast shows negative prospects for the next year. High prices will stay and they will get even worse. An economic slowdown is expected for 2023. According to the report, the previous predictions might have even been a bit off. Inflation rates will soar and will stay high for longer periods of time.

The IMF published its forecast on Tuesday and the outlook is not promising. In 2022 economic growth was around 5.7 percent, but this will fall to around 1.8 percent next year.  The Hungarian National Bank’s numbers are a bit more pessimistic as it reported a 3-4 percent growth for this year, while for the next year they predict 0.5-1.5 percent growth.

Fallbacks

From the report of Portfolio.hu, we can see the numbers in greater detail. GDP growth signals a huge setback as from 2022’s 5.7 percent will fall to around 1.8 percent in 2023. Average inflation is also not promising as it will not decrease at all. In 2023, inflation rates will only fall from 13.9 percent to about 13.3 percent. Therefore, high prices are here to remain even in 2023.

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The slowdown of economic growth is not only because of rampant inflation but also because of the deficit of the current account balance. The report is quite optimistic about the current situation. It predicts that the deficit this year will make up for about 6.7 percent of the GDP, while many experts think that this number can be around 10 percent. These higher predictions are mainly because of the increased utility costs, which cause a lot of hardship for many businesses. Despite the optimism, compared to the report in spring, the numbers are still very bad. Even for next year, the deficit will be around 3 percent of the GDP. In the spring, this prediction was positive with a 0.1 percent surplus.

There is also the problem with the layoffs at many businesses due to the increased operating costs. A lot of experts predicted an unemployment crisis, but this will not be a great problem. In this case, the already existing labour shortage is quite beneficial because before unemployment increases, this will be the number which falls first. Thanks to this, unemployment will not be a grave problem. Still, this does not mean that the numbers are promising. At first, they predicted a 4 percent unemployment rate for this year, but in the current report, it is only 3.4 percent. For the next year, the situation might get a bit worse with a 3.8 percent unemployment rate. However, this is roughly an average unemployment rate so this will not be the main concern.

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Source: Portfolio.hu, DNH