Péter Virovácz, the leading economist of ING Bank, shared an analysis of the prospects of the Hungarian forint and the country’s economy. He wrote that the recession still rules Hungary, but it will not be long. Hungary’s GDP may increase by 0.7 percent in 2023 and it will have a positive effect on the currency exchange rate of the forint.
Mr Virovácz said the Hungarian economy would probably show signs of contraction in the first quarter of 2023. That is because of the high inflation suffocating multiple segments of the economy, from consumption to investments. The inflation is expected to fall from February and will strengthen in mid-2023. As a result, the GDP will also start to increase.
In the second half of 2023, the export will be the engine of economic growth, portfolio.hu wrote based on Virovácz’s analysis. In 2024, he expects a dynamic economic expansion in Hungary. The sources will be the softening monetary conditions and the income of EU funds. The leading expert of the ING Bank expects an average of 19 percent inflation in 2023.
He said the Hungarian National Bank (MNB) would wait until May-June to lower the base interest rate. He added that the MNB would only start gradually decreasing it in the final months of this year. But that process will be slow.
According to Mr Virovácz’s analysis, the Hungarian forint may continue to strengthen in the middle term. In the short run, the trend will seem to halt because of the frozen negotiations regarding the EU funds. He projects a 375/EUR level by the end of this year, which will decrease to 365/EUR by mid-2024.
The end of 2022 saw record-low-forint values. In July, the Hungarian national currency was above 410/EUR because of the energy crisis, meaning that Hungary had to buy a lot of euros to purchase enough energy for the winter. However, the trend could not reverse. In mid-October, the forint reached a new historic low we had to pay more than HUF 430 for one euro.
Except for a December surge, since then, the Hungarian national currency has shown considerable strengthening. Today, it stands below 380/EUR.