Country analysis of Hungary of the competence distribution by levels of government in relation to regional development policies

The country analysis for Hungary, prepared by Kopint-Tárki, collects detailed regional data from national sources and information on distribution of competences, its evolution and the role of EU Cohesion Policy in development across different regions.The study was prepared in the framework of the project titled Distribution of Competence in relations to Regional Development Policies in the Member States of the European Union, launched by the DG REGIO in the fall of 2008. The objective of the project is to obtain a thorough picture of the distribution of competences between the different administrative levels in the Member States of the European Union. It concentrates on competences in relation to regional development, in the areas supported by the EU Cohesion Policy, with a particular focus on the budgetary aspects.

	2022 Fact	2023 Forecast	2024 Forecast
GDP	4.6%	-0.5%	2.5%
Gross Fixed Capital Formation	2.2%	-4.0%	3.5%
Industrial Production	5.8%	-1.0%	4.0%
Gross Salaries	17.4%	15.0%	8.0%
Unemployment Rate*	3.6%	4.1%	3.8%
Current+Capital Account**	-6.2%	-2.2%	-0.5%
General Government**	-6.2%	-4.9%	-3.9 %
Consumer Price Index*	14.5%	18.0%	5.8%
MNB Base Rate***	13.0%	11.5%	7.0%
10-Year Yield***	9.0%	6.5%	5.5%

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

16.08.2023. GDP decline becomes steeper

According to the first estimate, the Hungarian GDP was down 2.4% on an annual basis in the second quarter. The seasonally and calendar-adjusted rate was 2.3%, which is the third-worst growth performance within the EU. Compared to the previous quarter, the GDP declined again, for the fourth time in a row, at a rate of 0.3%.
On the production side, value added decreased in every sectors save agriculture, which means the services sector growth turned into the negative, too. In the light of the accelerating fall in private consumption, this was expected. On the expenditure side, the contraction in final domestic use probably became steeper, while net export have continued to contribute positively and substantially to economic growth.
After the average GDP decrease of 1.7% in the first half of the year, the chances that the contraction ofthe annual GDP can be avoided in 2023 are virtually nil.

01.06.2023. GDP: moderate consumption decline, favorable external trade trends

According to the second estimate, the unadjusted GDP was down 0.9% on an annual basis in the first quarter while the seasonally and calendar-adjusted volume decreased by 1.1%. Compared to the previous quarter, the GDP declined by 0.3%, a slight downward revision compared to the first estimate.
On the production side, a moderate decrease in industry and a steeper drop in construction was partially offset by a surprise year-on-year growth in the services sector. Despite the contraction of domestic demand, the majority of subsectors within services posted positive growth, including the double-digit growth rate in the health and social work sector.
On the expenditure side, the fall in private consumption was surprisingly mild (-2.5%). As a result, domestic final use decreased only by 4.9%, despite the more pronounced drop in fixed capital formation. Much of this decrease was canceled out by the favorable trends in the external trade of goods and services, particularly in the case of merchandise trade.

16.05.2023. GDP: moderate decline in the first quarter

According to the first estimate, the Hungarian GDP was down 0.9% on an annual basis in the first quarter. The seasonally and calendar-adjusted rate was 1.1%, which is the second-worst growth performance within the EU. Compared to the previous quarter, the GDP declined by 0.2%.
Taking into account that the production data shows a 3% fall in gross industrial output, an 8% fall in construction output and a 9% fall in real retail trade turnover, the year-on-year decrease in GDP by merely 0.9% can be considered relatively mild. It seems that on the one hand, the CSO envisages a dramatic agricultural recovery after the implosion in 2022. On the other hand, several services sectors seem to make it through the steep fall of household demand with ease. The CSO communication highlights the growth of value added in the health sector. On the expenditures side, net export may have had a strong positive contribution that offset a significant part of the negative effect of falling domestic demand.
In light of the moderate pace of economic decline in the first quarter, the chances that annual GDP will avoid decreasing this year seem higher than before.

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Country analysis of Hungary of the competence distribution by levels of government in relation to regional development policies

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telefonszám: +36 1 309 2695,
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e-mail: info@kopint-tarki.hu

1112 Budapest, Budaörsi út 45.

telefonszám: +36 1 309 2695,faxszám: +36 1 309 2647

e-mail: info@kopint-tarki.hu

telefonszám: +36 1 309 2695,
faxszám: +36 1 309 2647