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​ING Reassess Hungarian Economic and Market Forecasts

HUNGARY
  • ING forecast the economy to shrink by -1.2% QoQ, citing deteriorating industrial performance and weakening retail sales. ING expect the Hungarian economy to recover in 2H-2023, resulting in a 0.7% GDP growth for the whole year. An improving global growth outlook poses an upside risk to their forecast.
  • In Jan-Feb, ING see further acceleration in inflation to above 25% as start-of-the-year repricing could be stronger than usual, especially in food and services. This might be the peak as pipeline price pressure has started to abate and global commodity prices have been dropping. The slow and gradual retreat of price pressure will translate into an 18.5% average CPI in 2023 and a single digit print by the year-end. Risks tilted to the upside are mainly due to the presence of the price-wage spiral.
  • ING think the first signs of any potential NBH pivot might come only at the March meeting. But after the January hawkish surprise, they are skewed more towards the idea that the central bank’s hawkishness will reach well into the second quarter.
  • ING think that the hawkish intent will lend support to the forint, which they see continuing its current path. Gas prices still have room to fall in the first quarter, the forint that may benefit the most from this within CEE. The biggest risk at the moment is positioning, which is heavily tilted to the long side. Thus, they think further gains in the forint will be slower than what has been seen in the last two months, with the forint sensitive to the global story and geopolitical escalations.
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