Economic overview fourth quarter 2022
In 2022, domestic GDP growth was lower than previously expected, at 4.6% year-on-year. In the second half of the year, a decline in agricultural output held back overall economic growth. GDP growth is projected to be even lower, at around 1%, in 2023, as investment moderates and household consumption continues to fall. Growth in 2022 will be driven by expansion in industry (manufacture of motor vehicles, electrical equipment) and market services (mainly real estate, transport and warehousing). In the last two quarters of the year, economic output was down on the previous three months, reflecting a technical recession.
In 2022, the performance of the construction industry grew by 3% compared to the previous year, but at the same time, construction output prices increased by 24.5%, exceeding the average inflation rate. According to preliminary expectations, the volume of developments will decrease in several sectors (offices, retail).
The retail turnover increased by 5.3% compared to the previous year in the whole of 2022, but at the same time, a decreasing turnover was registered in the last quarter compared to the same period of the previous year. The reason for the decline is the decreasing consumption of households: The turnover in food and food-related mixed retail trade decreased by 1.5% (meanwhile, trade in fuel available at official prices for most of the year increased by 24.2%).
The turnover of commercial accommodation increased significantly compared to the year before, the 26 million registered guest nights represent a 45% increase. Passenger traffic at Liszt Ferenc International Airport exceeded 12.2 million in 2022, which is 2.6 times the total traffic of the previous year.
Inflation strengthened at an accelerating pace even after the middle of the year. In December 2022, consumer prices were already 24.5% higher on average than a year earlier. This brings the domestic price increase to two and a half times the EU average. The total annual inflation in 2022 was 14.5%, a higher rate was last measured in 1997. The prices of food and household energy rose the most (26% and 21.7%). According to the MNB's December forecast, inflation will continue to grow in 2023: it is expected to be around 15-19% on a yearly basis. After that, it may return to below 5% in 2024.
Unemployment rate rose to 3.9% by the end of December, but there is still a significant labor shortage in many areas. The tourism and hospitality sectors are particularly affected. At the end of the year, the employment rate of 15-64-year-olds was 74.4%, and it was the highest in the capital city (79%). In November 2022, the gross average salary of full-time employees was HUF 563,600, which was 16.8% higher than a year earlier.
The MNB base interest rate was 13% at the end of 2022, and the Budapest Interbank Forint Loan Interest Rate for a 12-month period rose from 2% to 15% in one year (BUBOR). The weakening of the forint compared to the euro continued: it reached a peak of 433 in mid-October, and then decreased to around 400 by the end of December.