Yet More Restrictions Lifted

Other indicators of returning social norms include the opening of Art Cinemas throughout Budapest, and post offices reinstating their previous waiting system, allowing customers to line up inside, rather than outside.

As things are slowly returning to normal socially, more effects of the epidemic are being revealed. During the emergency period, both undeclared work and wildlife poaching saw a marked uptick, due to the diminished oversight of state regulators.

According to the National Toll Service Provider Zrt. (NÚSZ), e-sticker sales dropped drastically because of the proliferation of telecommuting, enabling workers to stay at home, and the evaporation of tourism.

In a rare piece of good news from the hospitality sector, restaurants in Budapest were able to maintain their Michelin Stars, despite the lack of clientele, Forbes.hu notes. Also, due to pervasive self-quarantining, the rate of personal patient-doctor encounters dropped to 57% of what it normally would be, according to Zsolt Kiss, director general of the National Health Insurance Fund (NEAK).

According to a new indicator from the Ministry of Finance, the decline of the Hungarian economy may have been 16-18% at the end of March and into the first three weeks of April, when compared to the previous year.

Deep Recession

JP Morgan referred to this period as a “deep recession”, saying that industrial production was the weakest in Hungary among the entire emerging region in April; the country’s exports collapsed, consumer confidence plummeted, but retail and construction survived with a slightly smaller decline.

According to the most recent data from the Central Statistical Office (KSH), the average number of unemployed was 190,000 between March and May, and the unemployment rate was 4.1%. However, despite the number of jobseekers increasing by 10% in May, according to the National Employment Service (NFSZ), the rapid increase in the number of registered jobseekers has stopped, having peaked in June, State Secretary Sándor Bodó, of the Ministry of Innovation and Technology, told Magyar Nemzet (Hungarian Nation).

Indeed, the consumer confidence, business confidence, and business cycle indices from GKI Economic Research Zrt. have strengthened from May to June.

As the economic outlook stabilizes, many are now speculating about Hungary’s recovery prospects. According to the London analytics division of Morgan Stanley’s global financial services group, Hungary will be among the emerging economies in Europe where the value of gross domestic product will reach its pre-COVID-19 level by the end of next year, writes Világgazdaság (Global Economy).

According to the expectations of the Moody’s credit rating agency, Hungary’s GDP will decrease by 4.8% in 2020 as a whole, but will increase by 4% in 2021, while Fitch said it expects real GDP to fall by 5.9% this year due to the coronavirus shock, followed by 5.4% real growth in 2021.

For the year as a whole, GKI expects a decline of 6%, while the National Bank of Hungary in its recent inflation report said GDP may grow between 0.3-2% this year, with heartier expectations of 3.8-5.1% for 2021, and 3.5-3.7% for 2022.