Analysis by Region - Emerging Markets - Hungary
The Hungarian economy has proved remarkably resilient so far this year. GDP grew a solid 2.1% q/q in Q1, likely due to strong domestic demand boosted by pre-election spending and government interventions to limit energy price growth. But headwinds to the recovery are mounting. Tightening of the monetary-fiscal policy mix prompted by the growing pressure on the Hungarian forint (HUF) will weigh on the pace of growth going forward. In addition, if GDP growth slows notably, the robust earnings growth will prove hard to maintain, likely leading to a fall in real incomes. We have raised our GDP forecast for 2022 to 5.8% on the back of the strong Q1 outturn, but have cut our 2023 GDP growth forecast by 0.9ppts to 2.5%.
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