After two years, Hungary’s economy is shrinking again. In the first quarter, GDP was 0.9% below on an annual basis.
The technical recession continues, with the economy’s output falling for the third quarter in a row. In the first quarter of 2023, Hungary’s economy achieved only 99.1% of the output of the same period of the previous year, seasonally and by calendar days adjusted even only 98.9%. The last time the economy contracted was at the beginning of 2021, but then by 2.3% (or 1.8% in adjusted terms).
The Central Statistical Office (KSH) points to the weakness of industry as the primary brake on growth at the beginning of the year. In contrast, agriculture and the health sector made a positive contribution. Agriculture could also contribute positively to GDP again this year after the drought year of 2022.
However, the negative effects are still present for the time being. Inflation was around 25% in the first four months. The central bank has kept the key interest rate at 18% since last October. Real wages have recently fallen by almost a tenth. Consumption and investment are being held back by these factors. In addition, energy prices remain high for the economy.