Orbán in trouble? IMF cuts Hungarian GDP forecast

The International Monetary Fund (IMF) forecasts Hungary’s economy contracting by 0.3 percent this year.

Its latest World Economic Outlook released on Tuesday lowers its projection published in April from growth of 0.5 percent. Hungary’s gross domestic product shrank by 1.7 percent in the first half of the year, Central Statistics Office (KSH) data show. The government expects a turnaround in the third quarter. The IMF expects average annual inflation in Hungary to be 17.7 percent this year, while the current account is expected to show a deficit of 0.9 percent of GDP.

Hungary inflation falls to 12.2 pc in September

Consumer price inflation in Hungary was an annual 12.2 percent in September, the Central Statistical Office (KSH) said on Tuesday. Inflation fell for the eighth month in a row after peaking at 25.7 percent in January. Food prices rose by 15.2 percent in September, after a 19.5 percent increase in the previous month. Household energy prices fell by 14.6 percent. Gas prices were 33.5 percent lower and electricity prices declined by 3.2 percent. Prices in the category of goods that includes vehicle fuel rose by 19.9 percent. Motor fuel prices increased by 35.4 percent.

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Prices of spirits and tobacco products increased by 12.3 percent and clothing prices rose by 6.9 percent. Service prices increased by 13.6 percent, picking up from a 13.2 percent rise in the previous month. Core inflation, which excludes volatile fuel and food prices, was 13.1 percent. CPI calculated with a basket of goods and services used by pensioners was 11.6 percent. Month on month, consumer prices edged up 0.4 percent.

Commenting on the KSH figures, the economic development ministry hailed “the government’s successful fight” against inflation and predicted that the index may fall to below 10 percent in November. According to the ministry’s statement, the central bank had not been up to the task of tackling high inflation “fuelled by the war (in Ukraine), high energy prices and ill-advised sanctions” and “the government took over the task and responsibility” of handling it.

The government introduced its own measures to rein in inflation and reduce it to the single digits before the end of 2023, the statement said, adding that “the targeted measures are proving effective … as indicated by the KSH figures showing a tendency of inflation to shrink over the last eight consecutive months.” The ministry singled out “an especially good” development in food prices, adding that on an annual basis inflation fell from 44.8 percent last December to 15.2 percent.