Hungary’s economy is deeper in recession than expected. In the second quarter, economy shrank by 0.3% compared to the previous quarter, and by 2.4% on an annual basis, according to statistical data.
Contrary to analysts’ expectations, the economy did not recover in the April-June period either. For the fourth quarter in a row, it missed the base of the respective previous quarter. At the annual level, GDP growth has reversed from +8% at the beginning of 2022 to a minus of 2.4% (or -2.3% seasonally and by calendar day adjusted).
In the first half of the year, GDP is now 1.7% below the previous year’s level. This means that the target officially maintained by the government, according to which the economy should grow by up to 1.5% in the year as a whole, is practically no longer achievable. It is now apparent that the effects of the energy crisis and the Ukraine war are having a longer and deeper impact, and that record-high inflation with the consequent escalation of credit interest rates is curbing economic activity.