OECD Forecasts GDP Contraction for Hungary in 2023, Rebound in 2024
Photo by rafapress / Shutterstock.com
The OECD forecasts Hungary's GDP will fall 0.6% this year and grow 2.4% in 2024 in its biannual Economic Outlook published on Wednesday, according to a report by state news wire MTI.
The OECD attributed the contraction in 2023 mainly to falling private consumption and investment in the first part of the year.
It projected a gradual pick-up in household real incomes and private consumption, supported by disinflation, but said that public consumption and investment would provide less support to growth in 2024 and 2025 as the government aimed to reduce the budget deficit.
If core inflation is more entrenched than expected, interest rates could stay higher for longer, affecting consumption and investment, while a new surge of energy prices would have similar effects, the OECD said. Failure to reach an agreement on the delivery of European Union funding could curb investor confidence, increase the cost of capital, and put renewed pressure on the exchange rate, it added.
The OECD said restructuring energy support by moving from price caps to targeted cash transfers to support vulnerable households would increase incentives for energy savings and energy improvements, reduce fiscal exposure to changing global energy prices, and lower Hungary's dependence on energy imports. Strengthening competition in the transport, professional services and telecommunications sectors could boost productivity growth, while lower telecommunications prices and a broader diffusion of digital skills would help Hungarian companies bridge the digital gap with peer countries, it added.
SUPPORT THE BUDAPEST BUSINESS JOURNAL
Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.