ECONOMIC OVERVIEW 2023 SECOND QUARTER
The performance of the Hungarian economy in the second quarter of the year was below preliminary expectations, with a contraction of 2.4% compared to the same period in 2021. The biggest contributors to the GDP decline were the weakening performance of industry and the decline in market services - especially in the areas of transport, storage and commerce. The GDP fall in the first half of the year was 1.7%. For the year as a whole, GDP is forecast to decrease by around -0.5%.
Construction output fell by 7% in the first half of the year compared with a year earlier. At the end of June, the stock of contracts for the construction of buildings was up (+7.5%), while that for other construction fell sharply (-20.5%). Construction prices typically rose by 20-21% year-on-year during the first half of the year - depending on the type of construction.
Retail sales shrank by 10.4% in the first half of the year compared to the same period last year (raw data). The decline was particularly large for fuel consumption (-22% compared to the high base); in addition, the volume of food and food-related mixed retail trade continued to fall (-7.5%). Looking over a longer period, the rate of fuel consumption is gradually increasing, with a growth rate of almost 8% from January 2021.
The year-to-date calendar-adjusted volume index for retail trade was 89.7%.
The turnover of commercial accommodation showed a slight increase compared to the previous year, with nearly 11.6 million overnight stays (+0.13%) recorded by the end of June. Passenger traffic at Liszt Ferenc International Airport exceeded 6.68 million between January and June, 26.6% more than in the same period in 2022 and above the total annual traffic in 2021.
Inflation started to slow in February, but remained above 20% in mid-year, which is why Hungarian inflation remains the highest in the European Union. In June 2023, consumer prices were on average 20.1% higher than a year earlier. Average consumer price inflation this year is forecast to be as high as 16-19%, with a range of 3.5-5.5% in 2024.
The unemployment rate increased compared to the middle of the previous year: at the end of June, it was 3.8% compared to 3.3% in June 2022. The employment rate for 15–64-year-olds rose to 74.7% and was the highest in the capital (78.4%). Average net earnings after discounts were 17.7% higher in May than a year earlier, below the rate of consumer price inflation in that period.
The base rate of the MNB was 13% at the end of June, while the 12-month Budapest Interbank Offered Balanced Forint Rate (BUBOR) was at a similar level to the end of the previous year (15%). The weakening of the forint against the euro slowed down towards the middle of the year: the exchange rate fell from 400 in January to around 370 by the end of June (it dipped below 370 in May and then returned to 380 by August).