Márton Nagy, the economic development minister, said economic growth may slow to 1.5% this year, but Hungary can avoid recession, and GDP could jump as high as 4% in 2024.
The minister told Mandiner that last year was “one of the hardest since the change of regime” in 1989, with skyrocketing energy prices accounting for 10% of GDP, presenting a bill of 10 billion euros. Growth in 2023 may be boosted by subsidised loans for companies, and the growing performance of the tourism, industry and agricultural sectors, he said. Consumption is also expected to grow, he added. Inflation is expected to peak above 25% early in the year and fall into single digits by the end of 2023, he said. Price caps on basic foods will be phased out if inflation falls steeply by April, he said. Regarding monetary policy, Minister Nagy, a former deputy governor of the National Bank of Hungary (NBH), said the current 18% interest rate is one of the highest in the world. Only war-torn Ukraine and “countries like Ghana, Sudan, Venezuela, Argentina and Zimbabwe” exceed that rate, he said. Even considering the 50 basis point drop in the yield curve the market has priced in for the coming month, real yields will still be “well above 5%” if inflation falls into the single digits by year-end, he added. Regarding the government’s purchase of telecommunications company Vodafone, Nagy said government involvement in the strategic sector was a national interest. Public IT company 4iG has acquired a 51% share in Vodafone Magyarország, and state-run Corvinus International Investment 49%, he noted.