"The economy is slowly recovering from the real income shock caused by a combination of the spike in inflation, an inventory glut, and recession in Germany," the EBRD said.
"Real wage growth, boosted by public spending, strong construction and a passing inventory overhang are expected to pave the way for growth of 2.2% in 2024 and 3.5% in 2025," it added.
The projection is under the government's official forecast for 2024 GDP growth of 2.5%.
In the previous Regional Economic Prospects, published in September, the EBRD had forecast Hungary's GDP would grow 2.8% in 2024.
The EBRD acknowledged a marked decline of inflation in Hungary, "supporting a partial recovery of consumer confidence and building the case for further monetary easing".
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