Budgetary position in the light of the world economic conditions (in Hungarian)

The study provides an overview of the medium-term processes of the world economy and their impact on the Hungarian economy (growth) and public finances.

The study consists of four chapters. The first chapter examines the evolution of growth conditions in the world economy in the second half of 2010, in particular:

factors contributing to the medium-term slowdown

the emergence of new types of risks over the past five years: trade policy tensions, the Brexit process, the unpredictability of US foreign relations

current trends in the international financial environment and the macroeconomic effects of expected changes: the consequences of tightening monetary policy, risk aversion among investors, capital outflows from emerging markets, stock market risks

growth prospects and risks by major region.

The second chapter analyzes the structure and dynamics of Hungarian foreign trade:

the regional structure and geographical concentration of Hungarian exports, with special regard to the growth poles

the regional structure and geographical concentration of Hungarian imports

adaptation of Hungarian exports to world economic restructuring.

The third chapter examines the commodity structure of Hungarian exports and imports and its changes in various foreign trade relations.

The fourth chapter presents the fiscal and financial aspects of world economic and trade processes:

general government balance and government debt

the effect of changes in exchange rates on the real income of the national economy.

Impact of net exports on the balance of payments and changes in net external liabilities between 2010 and 2017.

	2023 Fact	2024 Forecast	2025 Forecast
GDP	-0.9%	1.7%	3.2%
Gross Fixed Capital Formation	-7.4%	-2.2%	4.6%
Industrial Production	-5.5%	-1.5%	5.0%
Gross Salaries	14.2%	13.2%	8.3%
Unemployment Rate*	4.1%	4.3%	3.7%
Current+Capital Account**	1.2%	2.3%	3.0%
General Government**	-6.7%	-5.5%	-5.0 %
Consumer Price Index*	17.6%	4.0%	3.8%
MNB Base Rate***	10.75%	5.5%	5.0%
10-Year Yield***	5.86%	6.5%	6.0%

*annual average **in % of GDP ***at year-end

03.09.2024. GDP: amid consumption expanding further, the fall in investments accelerated in Q2

The second estimate confirms that the unadjusted GDP was up 1.5% in the second quarter of 2024, while the seasonally and calendar-adjusted GDP volume climbed 1.3%. Compared to the previous quarter, by contrast, the GDP contracted by 0.2%.
On the expenditure side, the growth was still mainly supported by private consumption, which grew at a slightly accelerated rate of 4%. Fixed capital formation, on the other hand, fell by more than 15%, up from 7% in Q1. Nevertheless, overall final domestic use was up 0.7%, following six quarters of continuous decline, due to a surge in inventories. Despite this modest growth, import continued to fall, even if at a much slower pace. Thus the positive growth contribution of net exports weakened considerably in Q2.
On the production side, economic growth was still mostly driven by services. Industrial outputis still on a decrease and agricultural output started to contract as well.
On the expenditure side, the change in inventories will probably support growth, alongside consumption, but the growth contribution of net exports is likely to become negative in the second half of 2024.

30.07.2024. GDP growth numbers far below expectations

According to the first estimate, unadjusted GDP was up 1.5% only in the first quarter of 2024, while seasonally and working-day adjusted volume grew by merely 1.3% on an annual basis. Compared with the previous quarter, GDP fell by 0.2%. In the first half of 2024, the volume of GDP was 1.3% higher than a year earlier.
Due to the earlier release of preliminary data, it is now more difficult than in previous years to surmise the reasons for the weaker-than-expected second-quarter growth rate. In any case, according to the CSO, on the production side, industrial value added decreased in the second quarter. The recovery in construction, despite its small weight, may have contributed to overall growth to a non-trivial degree, but agriculture’s growth contribution has likely turned negative again, due to drought and heat waves. On the expenditure side, it can be assumed that the moderate expansion in private consumption continued, along with the decline in investments. The overall annual growth rate in final domestic use may have strengthened compared to the first quarter. In addition, the earlier strong positive contribution of net export may have been reduced to a fraction of its earlier level amid the spectacular weakness of external demand.
The disappointing second-quarter growth figures have cast a new light on this year’s outlook: the annual rate of GDP growth will likely fall short of 2%.

04.06.2024. GDP: expanding consumption, falling investments and plummeting inventories in Q1

The second estimate confirms that the unadjusted GDP was up 1.1% in the first quarter of 2024. Compared to the previous quarter, the GDP grew by 0.8%, which surpassed the EU-average growth rate of 0.3%.
On the expenditure side, the growth was mainly supported by private consumption, with a growth rate of 3.4%. By contrast, fixed capital formation continued to fall, by nearly 7%, while inventories kept contracting at a striking pace, leading to a plunge in total capital formation by almost 22%. Overall final domestic use was down 2.9%. Import also fell by more than 9%, due to which the growth contribution of net exports remained strongly positive and surpassed the negative contribution of domestic demand to GDP growth.
On the production side, economic growth was mostly driven by services. Industrial output, on the other hand, is still on a decrease.