International bank talks about the gloomy future of Hungary’s economy
Hungary’s economy will turn into a recession in 2023 even if it starts to grow in this year’s second half. Furthermore, the bank expects no EU money will come to Hungary this year. Moreover, we may lose all our RRF money.
According to portfolio.hu, the London centre of the UniCredit Bank shared its analysis about Hungary’s economy recently. They said that the Hungarian GDP would fall by 1 percent in 2023, but in 2024 will see a 3.5 percent increase. To make matters worse, they calculate with no EU money in 2023 and believe that the forint will not be able to break the 400/EUR threshold. To make matters worse, they expect a weakening this year and calculate a 420/EUR exchange rate.
They believe that the inflation will remain two-digit in 2023. But UniCredit reckons that FDI will start to flow again in Hungary. Meanwhile, we will get the EU’s EUR 6.3 billion development fund in 2024. However, they think receiving the RRF funds is uncertain even in 2024.
All in all, 2023 will be the year of difficult decisions, according to the representatives of the bank.
Hungary’s budget ends 2022 with HUF 4,753 bn shortfall
The Hungarian budget, excluding local councils, was 4,753.4 billion forints in the red at the end of 2022, as against the official target of 3,152.7 billion forints, according to preliminary data released by the Finance Ministry on Wednesday. The deficit was 1,287 billion forints at the end of November. The central budget posted a shortfall of 4,611.5 billion at the end of December. Social security funds were 405.8 billion in the red, while the separate state funds had a surplus of 263.9 billion, the Hungarian News Agency (MTI) wrote.
Ministry: Public debt fell more than expected last year
The war in Ukraine and “failed Brussels sanctions” changed the economic dynamics last year, and the government responded by doubling down on schemes to protect jobs and strengthen families amid the resulting crisis, the finance ministry said on Wednesday, noting that, at the same time, the public debt is expected to have fallen more sharply than initial projections, to 73.5 percent from 76.8 percent in 2021. The economy expanded by over an annual 4 percent, and the number of employed grew to over 4.7 million, while the jobless rate remained below 4 percent, the ministry said in a statement.
Hungarians still pay the lowest energy bills in Europe and owing to measures to shore up energy security and supply, the budget ended with a deficit of 4,753.4 billion forints (EUR 11.9bn) in 2022, the bank added. Protecting pensioners has been a priority, and the government paid the full 13th-month pension as well as additional pension increases. In 2022, 4,791.5 billion forints was spent on retirement benefits, the statement said.
Based on EU methodology, the budget deficit is expected to be 4.9 percent of GDP, as planned, while taking into account spending on building up the country’s gas reserves, the deficit may come in at 6.1 percent of GDP. The government targets a further reduction in the public debt this year and sees a budget deficit of 3.9 percent, the statement added.
Source: portfolio.hu, MTI
