In the first quarter of 2013, Hungary’s economy expanded by 0.7 percent compared to the previous quarter, which means that recession, in a technical sense, has come to an end in Hungary. According to unadjusted data GDP fell by 0.9 percent year-on-year, while seasonally- and calendar-effect adjusted data signal that the economy shrank by 0.3 percent compared to the first quarter of 2012. Thanks to the stability measures introduced so far, the Hungarian economy has entered an upward economic path, and the latest data corroborate the Government’s 0.7 percent growth estimate for 2013 as laid down in the Convergence Programme.
In accordance with the central bank’s inflation target, Hungary aims to achieve a consumer price index level of 3 percent. After declining moderately over the past couple of years, the pace of inflation decrease accelerated sharply as of the beginning of 2013. The annual inflation rate – for the very first time since the inflation target system was established – declined to below 3 percent in February, 2.2 percent in March and 1.7 percent in April. Looking back at a period covering several decades it can be concluded that the annual inflation index reached a historic low in April 2013.
The European Commission has recently published its Spring Forecast for 2013. This contains key macro-economic data, including facts for 2012 and estimates for 2013 and 2014, as well as short evaluations on each European Union member state.
According to Eurostat data, employment stagnated in the past two years with regard to EU averages. On the other hand, in the Euro-zone the employment rate among those aged 15-64 years decreased by 0.5 percent which was the result -- to a large extent -- of inauspicious trends in the peripheral countries. In Hungary, this indicator improved from 55.8 percent in Q4 2010 by 2 percentage points to 57.8 percent in the corresponding period of 2012. Therefore, along with the Baltic states and Malta, Hungary belongs to those countries within the European Union where employment growth was the largest in the past two years.
According to the latest statistics of the Hungarian Central Statistical Office (KSH), tourist traffic at accommodation establishments continued to increase in February 2013: the number of guests and tourism nights both signal higher demand in the sector. In the second month of the year 426 thousand guests were registered at accommodation establishments who spent altogether 988 thousand tourism nights in Hungary. These figures constitute an increase of 9.5 percent and 6.2 percent, respectively, compared to the corresponding period of last year.
Recently, several economic indicators have signalled that Hungary is becoming more and more robust and confidence in the country is increasing. Favourable trends can be observed, for example, on the market of Hungarian government securities which enhance the stability of debt financing: average yields at auctions are at historic lows, in the past six months the yield curve has moved significantly lower and the stock of retail government securities has continued to increase. Concurrently, the domestic currency has also strengthened markedly in the past couple of weeks. Lower CDS pricing indicates the improvement of risk perceptions as well.
According to the latest survey of the Hungarian Association of Logistics, Purchasing and Inventory Management (HALPIM), Purchasing Managers Index (PMI) in March – in view of seasonally adjusted data – was 55.7 points in Hungary. This figure is 1.6 percentage points higher than that of February and exceeds the average registered in March of the last three years (54.2 points).
On 2 April 2013 the Hungarian Central Statistical Office (KSH) published revenue and expenditure data of the central government sector for Q4 2012 and the entire year of 2012.
The pace of population decline moderated in 2012 compared to the previous year, as the number of births increased significantly last year.
As about 40-45 percent of Hungary’s general government debt has been denominated in foreign currencies. The duration became shorter with the IMF loan, which was unavoidable in 2008, so that the refinancing is due relatively soon, the country required further foreign currency resources. Thanks to the improving confidence in the fundamentals of Hungary and positive international investment climate and sentiment, the Government Debt Management Agency (AKK) mandated large investments banks last week to manage USD-denominated benchmark government bond issuance, after a highly successful investor roadshow. As a result altogether 3.25bn USD bonds were sold with yields slightly below the indicative levels.