The European Bank for Reconstruction and Development (EBRD) forecasts Hungary's GDP will contract 0.2% this year in its latest Regional Economic Prospects, revised from a 0.4% growth in the May report.
"Weak external demand, tight financing conditions and delayed disbursement of EU funds, will likely result in a contraction of economic output, notwithstanding various government stimuli programmes," it said.
The forecast is in line with the analysts’ projections.
On a quarterly basis, output fell for the fourth straight quarter in the April-June period, the longest streak since 1995. Hungary's GDP shrank 1.7% y/y in H1.
Since Viktor Orban took power in 2010, Hungary only recorded economic downturn in 2012 and during the pandemic in 2020.
The EBRD sees Hungary's GDP growth picking up to 2.8% in 2024 on the back of recovering domestic demand.
Growth in the EBRD regions is expected to slow to 2.4% in 2023 from 3.3% in 2022. In 2024, as inflation continues to ease, growth is expected to pick up to 3.2%
In the Central European and Baltic EU regions, the EBRD forecasts average economic growth of 0.5% this year and 2.5% next year.
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