Budapest's Economic Growth Expected to Reach 3-4 Percent by 2024

Published: November 17 2023

The Hungarian economy is expected to experience favorable growth in the coming years, with Budapest's economic growth projected to reach 3-4 percent by 2024. This positive outlook was highlighted by the Minister of Finance and other economic experts at an international economic forum in Budapest.

Despite the economic impact of the Russian-Ukrainian conflict, the Hungarian economy has rebounded quickly from the pandemic, with a GDP growth rate of 7.1 percent in 2021. The growth prospects remain strong, and the government is focused on reducing the deficit while supporting overall economic growth.

Investment in Hungary has been on the rise, with the country boasting the highest investment rate in the EU. The current account balance has also improved, and it is expected to reach a record high this year. These factors contribute to the positive growth prospects for the Hungarian economy.

One of the challenges in the fight against inflation is bringing down the consumer price index, especially in the Central and Eastern European region. However, there is a disinflationary trend in the eurozone and the region. Positive real interest rates have returned after more than a decade, supporting the continuation of disinflation. The Hungarian National Bank aims to continue cutting the base rate in the coming months, with the possibility of reaching single-digit rates by February 2024.

Geopolitical tensions continue to pose risks to growth prospects and investor sentiment. Both the Gaza-Israel conflict and general geopolitical tensions have added to the uncertainty. However, the strong disinflation and reduction in vulnerability will contribute to Hungary's economic resilience.

Overall, Budapest's economic growth is on track to reach 3-4 percent by 2024, supported by investment, improved external balance, and measures to combat inflation. The Hungarian government remains committed to reducing the deficit and fostering a favorable economic environment.

What is the outlook for the Hungarian economy? The outlook for the Hungarian economy is favorable, with a return to dynamic growth expected in 2024.

What was the GDP growth in Hungary in 2021? The Hungarian economy experienced GDP growth of 7.1 percent in 2021.

What is the current account balance in Hungary? The current account balance in Hungary improved in the first half of the year, and it is projected to reach a record high this year.

How is investment in Hungary? Investment in Hungary is up, with the country having the highest investment rate in the EU. The growth prospects for investment are good, supporting overall economic growth.

What does the government insist on in regards to the deficit? The government insists on the continuous reduction of the deficit in Hungary.

What is the major challenge in fighting inflation in the region? A major challenge in fighting inflation in the region, including Hungary, is to bring down the consumer price index. There is currently a disinflationary trend in the eurozone and the Central and Eastern European region.

What has happened to positive real interest rates? After more than a decade, positive real interest rates have returned. This is seen as necessary for disinflation to continue.

What phase has monetary policy entered into in Hungary? From October, monetary policy in Hungary has entered a new phase, focusing on setting an interest rate supportive of disinflation, using a data-driven cautious approach.

What is the projection for the base rate in Hungary? The Hungarian National Bank is expected to continue cutting the base rate in the coming months. By the end of the year, it could fall below 11 percent and be in single digits by February 2024 based on current data.