Márton Nagy, the minister of economic development, said the government aims to reduce the budget deficit to 3.5% of GDP in 2023 from this year’s deficit of 4.9% and expects the economy to grow by 1.5% following the 5% expansion expected this year.
Minister Nagy told a conference organised by the Oeconomus Foundation for Economic Research in Budapest that energy prices impose an extremely heavy burden on the budget, adding that the state’s energy costs were expected to come to 2,500 billion forints (EUR 6.1bn) next year. The budget would be balanced or would have a surplus without the drastic price increases, Nagy said, adding that the deficit could be attributed entirely too high energy costs. Hungary this year expects to pay a total of 17 billion euros for energy compared with 7 billion last year, even though consumption has not increased, Nagy said, adding that energy costs are expected to reach 17-18 billion euros next year. The Hungarian economy was stable when the crisis hit but the terms of trade deteriorated because of the energy costs, the minister said. Because of this, Hungary’s current account deficit could reach 8% by the end of the year, Nagy said, adding that if energy prices had not risen, the country would also have a trade surplus. Meanwhile, the minister said inflation was expected to peak at 25-27% in January or February next year and reach the single digits by the end of the year. He put average annual inflation for 2023 at 15-16%, adding that average wage growth was expected to be slightly higher. Concerning the long-term outlook, Nagy said gas and electricity cost five to six times more in Europe than in the United States, which he said put the continent at a further competitive disadvantage. The world and the European Union face a recession, he said, adding that the entire existence of energy-intensive industries in Europe was under threat.