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Macroeconomic Outlook – June 2022 issue

On the basis of raw data, domestic GDP grew by 8.2% in the first quarter of this year compared to the same period in 2021, an outstanding result in the European Union. With the deteriorating geopolitical situation in the neighbouring country and COVID constraints in the Far East region still posing difficulties and negatively impacting costs due to rising energy and raw material prices, the economy is slowing down and domestic companies continue to face supply constraints. The government expects the domestic economy to grow by 4.3% by the end of the year.

GDP vs. Economic sentiment for Hungary

Source: EXIM Hungary, Factset, HCSO, Eurostat


Despite the international trends, the domestic economy performed particularly well in the first quarter, especially the increase in manufacturing production and the surge in household consumption contributing to this performance. Domestic industrial production expanded by 3.6% in March compared with the same month a year earlier. Among the major subsectors of manufacturing, only the manufacture of transport equipment and closely related rubber and plastic products decreased (by 13.3% and 2.6% respectively), primarily due to the recurrence of difficulties in the supply of raw materials and the persistent global shortage of chips. Within manufacturing, food and beverages (with a share of 11.4%), the most important sub-sector after transport equipment (21.5%), also grew, exceeding the volume recorded in the previous March by 10.2%. Among the main manufacturing subsectors, the largest increase was recorded in electrical equipment manufacturing, which grew by 22% overall compared to the level 12 months earlier (accounting for 8.4% of the total output of the sector). The strong performance is due to the recent surge in the production of batteries and electric motors.

Industrial production Hungary (seasonally adjusted, 2015 = 100)

Source: EXIM Hungary, Factset, HCSO


Overall, even though the same period of the previous year still coincided with the curfew period, capacity utilisation in manufacturing increased by 4.5% over the period, confirming that the positive results are not mainly due to the lifting of the curfew, but rather to the improved performance of the sector as a whole. This was favourably supported by the lowest unemployment rate since the beginning of 2020 (at 3.6% in March) and the highest labour market participation rate in recent years (77% within the age group of 15-64).

Capacity utilisation in manufacturing in Hungary (rate)

Source: EXIM Hungary, Factset, OECD


Source: EXIM Hungary, Factset, HCSO


Retail trade turnover at current prices was HUF 1,375 billion in March; a higher volume was recorded only in December over the past 12 months. This represents an increase of 16.2% compared to the same month last year. The increase was driven by a significant surge in purchases of non-food products and the consumption stimulating effect of the fuel price freeze. The former accounted for one third of the total consumption and included a 320% jump in demand for clothing, 228% for second-hand goods, 75% for furniture and electronic goods and 59% for books and computer equipment. This is due to the fact that rising inflationary pressures - which raised the value of the consumer basket by 8.5% in March compared to the previous year - encouraged consumers to realise their plans earlier and advance their purchasing intentions, and that discretionary (freely spendable) income also increased as a result of government decisions. Sales of fuels in the latter group, which account for a fifth of retail sales, rose by 51.4%, driven on the one hand by price fixing and on the other by the stimulus effect of a demand shock resulting from misinterpretation of supply volumes. Inflationary pressures, also mentioned above, were mainly driven by dynamic international increases in raw material, commodity and energy prices, exacerbated by the still ongoing inadequacy of global supply chains. Márton Nagy, Minister for Economic Development pointed out this week, the movement of inflation in Hungary depends 80% on international trends, the indicator is expected to peak at 9–10% by this summer to then decrease to around 5% next year.

Domestic sales in retail trade (April 2015 = 100)

Source: EXIM Hungary, Factset, OECD


The price hike caused a slight slowdown in the expansion of the construction sector, but even so, output grew by 10.5% and the volume of construction contracts was 6.4% higher at the end of March compared with the same period a year earlier. The number of housing permits issued in the first quarter was 15% higher than 12 months earlier, so further expansion in the sector is expected in the coming period.

Volume index of construction output (seasonally adjusted, 2015 =100)

Source: EXIM Hungary, Factset, HCSO, OECD


The deficit in the trade in goods balance since mid-2021 persisted (€503 million), but exports of goods were 8.7% higher compared to the previous March and 22% higher compared to December. This year, new export orders in electrical equipment and pharmaceuticals increased from February to March, which suggests an improvement in the external trade balance in the coming period. The government expects a positive net export already in the second half of the year which will also contribute favourably to the GDP growth.

Elérhetőség: research@exim.hu

Utolsó módosítás dátuma: 21 June 2022

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