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COUNTRY INSIGHTS

Moderate recovery and sticky inflation
HUNGARY · Forecast · 24 Jan 2024

Our new quarterly forecast for 2024-2025 uses the average energy import prices of 2023, and it treats the possible escalation of the existing sharp conflicts in the Middle East, and a substantial upturn in energy prices and sea transportation costs as a result, as a major risk factor for 2024-202...

Two forint-negative events are reported today
HUNGARY · In Brief · 17 Jan 2024

MNB's Mr. Virág spoke at Euromoney's conference in Vienna today. He gave a pretty specific guidance on the prospective path of the Bank's interest rate policy for the next six months. He said that the Council may speed up rate-cutting to 100bps per month at its next meeting on January 30, as curr...

An exceptionally weak figure for construction in November
HUNGARY · In Brief · 15 Jan 2024

Construction output fell by 2.6% mom, 12.8 yoy in November, on seasonally and day-adjusted basis, of course. This looks exceptionally weak, after 0.3% yoy positive growth in October and -1.1% yoy in Q3. Importantly, the bulk of this weakness is conveniently explained by a major negative base effe...

Mixed feelings about the December CPI-inflation data
HUNGARY · In Brief · 12 Jan 2024

The headline rate of CPI-inflation for December was reported at -0.3% mom, 5.5% yoy this morning. Core inflation was much stronger, at 0.2% mom and 7.6% yoy. Non-fuel inflation, which we also think is an important indicator, was 0.1% mom, 6.4% yoy. The yoy headline rate dropped sharply, from 7.9%...

Industrial slump in Europe is taking its toll: an awful output number is reported for November
HUNGARY · In Brief · 09 Jan 2024

KSH says that industrial output fell 2.3% mom, 5.4% yoy in November. The latter follows -3.1% yoy in October and -5% yoy in Q3. The cumulative 11-month output growth was -4.8% yoy. Details are not available yet, but KSH briefly said that in November, only oil refining and chemical products grew, ...

Retail sales was trying to climb out of the ditch with moderate success in November
HUNGARY · In Brief · 08 Jan 2024

Retail sales grew by 0.8% mom in November, the best figure seen since March 2022, according to this morning's report by KSH. On fix basis (Dec 2010 =100), the volume of turnover developed as follows: The encouraging increase in November must have been greatly supported by the 3.1% compensatory in...

Largely good news on government finances
HUNGARY · In Brief · 04 Jan 2024 · 1 response

Yesterday's sale of $2.5bn of 12-year USD-denominated bonds by ÁKK was met by good demand, and pricing was significantly more favourable than a year ago. The new bonds were based on a $5.8bn book, and the yield came out at 5.74%, 180bps over the US Treasury bond expiring in November 2033. Last Ja...

Officially estimated fiscal deficit just slightly below the 2022 actual, exceeds revised target
HUNGARY · In Brief · 02 Jan 2024

Meeting a legal requirement, the Finance Ministry published its revised macroeconomic forecast tables on December 31. In these, the Ministry estimated the annual general government deficit by Eurostat method at 5.9% of GDP, slightly below the 6.2% actual of 2022, and materially exceeding the revi...

EU payments have started to flow to Hungary
HUNGARY · In Brief · 28 Dec 2023 · 1 response

When the EU Commission unblocked Hungary's access to €10.2bn of cohesion policy funds on December 13, the key question became whether they would actually start to pay out the affected funds according to the regular procedure or they would start postponing and delaying actual transfers, waiting fo...

Under the Christmas tree: Bulgaria has withdrawn its mega-tax on Russian gas transit
HUNGARY · In Brief · 23 Dec 2023

In our monthly report, published yesterday, we reported about the Bulgarian €10/Mwh tax on the transit of Russian gas towards Serbia, North Macedonia and Hungary as a standing and unsolved issue, with a significant damage potential. However, the news has come since then that the tax is now withdr...

A pyrrhic victory at the December EU Summit
HUNGARY · Report · 22 Dec 2023

Almost exactly one year after the EU Council’s blocking decision, the EU Commission endorsed the government’s reforms of the domestic judicial system, unfreezing Hungary’s access to about €10bn of its seven-year EU transfer quota, in the form of development grants from cohesion policy programs. W...

MNB base rate down 75 bps today, to end 2023 at 10.75%
HUNGARY · In Brief · 19 Dec 2023

The Monetary Council held its last regular monthly rate-setting meeting today, this time also discussing the Q4 inflation report. The decision was a 75 bps cut of the base rate and the interest rate corridor alike, the same way as it happened in the previous two months: After the meeting, vice go...

Great relief - PM Orbán did not veto EU accession talks for Ukraine and Moldova
HUNGARY · In Brief · 14 Dec 2023 · 1 response

He did not vote for it either: he simply left the room before the vote, saying he did not want to take part in a wrong decision, but if the other 26 members wanted it to be so, he did not intend to hold them up on that road. A great relief indeed—life will be much easier for Ukraine, the EU, and ...

White smoke from Brussels - the Commission unblocked access to €10.2bn of cohesion policy grants today
HUNGARY · In Brief · 13 Dec 2023

Almost exactly one year after the EU Council's blocking decision, the EU Commission today announced the partial unblocking of the government's access to the cohesion policy development grants earmarked for Hungary in the EU's medium-term budget for 2021-2027. Just as widely expected for the last ...

The EU has received a letter from the Hungarian minority in Ukraine - not exactly what might have been expected
HUNGARY · In Brief · 12 Dec 2023

The Alliance of Hungarian Democrats in Ukraine has released an open letter, addressed to Charles MIchel, president of the EU Council, and Viktor Orbán, Hungary's prime minister, on its Facebook page over the last 24 hours (please, see below), emphatically urging EU decision-makers to support the ...

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