The study consists of three parts. The first chapter provides a brief overview of the international environment of the Hungarian economy, showing the consequences of the pandemic for the international economy, global trade, commodity markets and the economies of key regions in 2020.
The second chapter analyses the macroeconomic developments in Hungary in 2020, addressing in particular the effects of the economic crisis caused by the epidemic on certain components of the production and expenditure side of GDP. It presents labor market developments, taking into account the structural shifts behind the headline numbers. It also evaluates the main Hungarian economic indicators (changes in GDP, industrial production, real household earnings and consumption, investment, foreign trade, unemployment) in comparison with the correspondent trends in the EU. It forecasts not only individual components of GDP, but also, presented in a fan chart, the expected economic performance of each quarter of 2021.
The third chapter analyses fiscal and monetary developments. It provides a detailed assessment of the budgetary developments in 2020, the evolution of the major items on the expenditure and revenue side. It also presents the development of the Hungarian budget deficit and public debt in comparison with other countries of the European Union. It examines changes in the size, GDP ratio and composition of Hungarian public debt, with particular reference to the budgetary implications of the crisis. It analyzes the main features of monetary policy, the development of the exchange rate and government securities market yields, also in a regional comparison.
This chapter provides an analysis of inflation trends (also in an EU comparison) and an outline of the expected evolution of the consumer price index. The study emphasizes that although the consolidation of the economies shattered by the epidemic has begun, the return to pre-2020 dynamics will be slow both in Hungary and on an international scale. The uncertainty surrounding the epidemic will keep hampering full recovery. On the other hand, fiscal stimulus supports economic growth, at least in the short/medium run.