The better-than-expected performance of the Hungarian economy implies that the damage caused by the restrictions imposed in March was less than expected, and enterprises are increasingly learning to adapt to unexpected situations and can shift to digital sales.
Downturn on an annual basis, growth on a quarterly basis
In Q1, economic output was 1.8% lower than one year before, but it increased by 1.9% quarter on quarter. These figures are substantially better than what the analysts expected.
Q1 data also show that many sectors could perform well,
from which the Hungarian Central Statistical Office mentioned the industry, IT, communications, finance, and insurance.
Because of the base effects and the increase of the excise tax,
the inflation rate increased to 5.1% in April.
In other words, it left the target range of the central bank. Given the decrease in the base period, fuel prices increased by 39.2%, while tobacco product prices increased by 20.1%. The average increase in food prices did, however, slow down and was, therefore, 2.4%. Meanwhile, the prices of durable consumer goods increased by 3.4% and the prices of services increased by 2.0% on a year-on-year basis.
Given the inflation trends, the Monetary Council of Magyar Nemzeti Bank is expected to tighten monetary conditions at its meeting in June.
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