In the first quarter of 2023, the performance of the Hungarian economy fell by 2.4% compared to the same period of the previous year. The biggest contributor to the GDP decline was the weakening performance of industry and the decline in market services. Construction industry production decreased in the first half of the year, but construction prices rose significantly compared to last year. Retail turnover shrank by 10.4% in the first half of the year compared to the same period of the previous year. In June 2023, consumer prices were on average 20.1% higher than a year earlier. Hungarian inflation is still the highest in the EU, triple the EU average. In the following article we have compiled the most significant economic indicators of the 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).
By continuing to browse this site, you agree to the use of Cookies or other tracers by us and our partners to improve the site's performance, to offer you content, communications and advertising that is personalised and adapted to your centres of interest, and to compile visit statistics.
