Hungary technically entered recession at the end of 2022, as households and businesses tightened their belts against a backdrop of runaway inflation in the central European country, according to an initial estimate published on Tuesday.
Gross domestic product (GDP) fell 0.4% over the period from October to December, after falling 0.7% in the third quarter, the Institute of Statistics announced.
This poor performance occurs in a context of soaring prices, a phenomenon which was accentuated following the invasion of Ukraine by Russia.
Inflation came close to 26% in January, the highest level in the European Union (EU), with energy prices up 52% and food prices up 44%.
Nationalist Prime Minister Viktor Orban regularly blames Brussels' sanctions on Russia for explaining the economic slump, despite voting for them all alongside his partners.
He calls for a ceasefire and peace talks between Moscow and kyiv.
The last technical recession - the generally accepted definition is at least two successive quarters of contraction - dated back to the first half of 2020, under the effect of the shock of the Covid-19 pandemic.
Over the whole of 2022, activity grew by 4.6% thanks to a good first half in this country of nearly 10 million inhabitants.
Economy Minister Mihaly Varga, quoted by the MTI news agency, welcomed this result “
despite a protracted war and sanctions from Brussels
”.
"
Hungary has done better
" than in 2021 "
when it has not yet touched
" the billions of European funds, frozen pending anti-corruption reforms, he commented, also welcoming a very low unemployment rate (around 4%).
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According to Peter Virovacz, economist at ING, the current bad patch should only be short-lived.
“
There is a good chance that GDP will contract further in the first quarter of 2023, before a process of recovery
,” he wrote in a note, predicting “
a fleeting crisis
”.