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COUNTRY INSIGHTS

Negative GDP growth reported for Q1
HUNGARY · In Brief · 30 Apr 2025

Preliminary, seasonally and day-adjusted GDP data shows -0.2% qoq, -0.4% yoy real growth for Q1, as reported this morning. This came after +0.6% qoq, +0.1% yoy in Q4, and 0.5% growth in full-year 2024. In an unusually brief statement, KSH only said that Q1 growth was supported by services but hel...

Fiscal cost of election campaign spending increases
HUNGARY · In Brief · 29 Apr 2025

The other day, Economy Minister Nagy confirmed that the members of armed services (soldiers, policemen, etc., about 100k people) will be entitled to another one-time bonus payment, equal to 6-month worth of salaries, in February next year, and that the government are going to earmark some HUF450b...

Non-interest central government cash deficit down in Q1
HUNGARY · In Brief · 24 Apr 2025

Two days ago, when we released our new quarterly forecast report, we were still unable to give any breakdown of the Q1 cash balance of the central government, because the respective official data had not been published yet. So we could not present how exactly the annualised cash deficit ratio ros...

Past Liberation Day: a few changes to growth and inflation forecasts
HUNGARY · Forecast · 22 Apr 2025

The world has changed quite a bit since we published our previous forecast in January, because of Mr. Trump’s appearance on the scene, and especially his latest aggressive trade policy measures. The latter are pushing the global economy towards lower growth but also lower energy prices, both extr...

S&P changed the outlook for its BBB- sovereign credit rating to Negative from Stable
HUNGARY · In Brief · 13 Apr 2025

This happened at this year's first pre-set review date for Hungary, as regards any of the top three rating agencies: At the same time, S&P affirmed its BBB- credit rating, but even so, the agency's decision pushed Hungary to the very brink of losing its investment grade credit rating. S&P lowered...

New MNB vice governor and Monetary Council member proposed by PM Orbán
HUNGARY · In Brief · 11 Apr 2025

Parliament's economic committee is scheduled to hear Mr. Zoltán Kurali (left on the picture below, standing next to governor Varga) on Tuesday next week. Mr. Kurali has been nominated by PM Orbán for the position of vice governor in the MNB. At present, the MNB has three vice governors: Barnabás ...

Good news on inflation at last: inflation fell more than expected in March
HUNGARY · In Brief · 08 Apr 2025

The headline rate was 0% mom, 4.7% yoy, down from 5.6% yoy in February, core inflation was 0.3% mom, 5.7%, down from 6.2% yoy, non-fuel inflation was 0.3% mom, 5.2% yoy, down from 5.6% yoy: Note: year-on-year changes in percent; Sources: KSH, own estimates Importantly, analysts expected the headl...

Both retail sales and industrial output followed their respective trends in February
HUNGARY · In Brief · 07 Apr 2025

Retail sales fell by 0.6% mom, but it grew by 3.3% yoy, in volume terms, in February. The fixed-base chart (Dec 2010 = 100, source: KSH), suggests that it was a correction after January's outstandingly robust result, back to an otherwise significantly increasing trend: So, the trend of strengthen...

Government macro forecast changes in the right direction but at the wrong time
HUNGARY · In Brief · 03 Apr 2025

Early this week, Mr. Nagy, the economy minister, announced a scaling back of the government's 2025 GDP growth forecast to 2.5% from the 3.4% included in the annual budget, parallel to raising this year's forecast for average CPI-inflation to 4.5% from the original 3.2%. These are exactly the figu...

Long-time gap between real wages and retail sales growth closed in January
HUNGARY · In Brief · 31 Mar 2025

For quite a while, but at least throughout the whole of 2024, government speakers and all sorts of analysts have been complaining about the weakness of consumption growth, in comparison with the expansion of real wages. Problem solved, one could say when looking at the January data (yoy changes i...

Today's Monetary Council went just as expected
HUNGARY · In Brief · 25 Mar 2025

The MNB base rate was left at 6.5% and the interest rate corridor remained at 5.5% to 7.5%. At the press conference held after the meeting by Mr. Varga, the new governor, it has been stressed that the base rate may be left unchanged for a longer period, without any specification on how long that ...

Monetary Council tomorrow: no rate change expected
HUNGARY · In Brief · 24 Mar 2025

This will be the first regular monthly rate-setting meeting chaired by Mr. Varga. In addition, it will be the one to discuss the Q1 inflation report. So, a really important event to watch anyway. Importantly, analysts are unanimously predicting no rate change from 6.5%, according to Portfolio.hu'...

The election campaign has started: major social policy measures announced
HUNGARY · Report · 21 Mar 2025

European gas prices have corrected substantially in recent weeks, more on the warming weather than on peace prospects. We still see no realistic prospect for the restart of the transit of Russian gas through Ukraine. Hungary finished the winter period with higher-than-usual gas reserves, and it c...

Inflation rose further in February: an administrative ceiling comes on retail trade margins for a set of basic food items
HUNGARY · In Brief · 11 Mar 2025

Headline CPI-inflation in February was reported at 0.8% mom, 5.6% yoy this morning, the latter up from 5.5% yoy in January. Core inflation looked bad as well, at 0.6% mom, 6.2% yoy, the latter up from 5.8% in January. Non-fuel inflation, which we estimate from the official KSH data, was 0.9% mom,...

PM Orbán vetoed in the European Council: will this be consequential?
HUNGARY · In Brief · 08 Mar 2025

On March 6, the European Council held a 'special' (extraordinary) summit meeting, in preparation for the regular summit set for March 20-21. The Council did not make any decision on this occasion, but it published a set of conclusions on two subjects: a €800bn plan to rearm Europe, and EU policie...

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