Economy minister suggests growth and inflation is stronger than generally expected

HUNGARY - In Brief 08 Nov 2022 by Istvan Racz

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The macro news for today is economy minister Nagy's statement that GDP growth will likely reach a positive 4% yoy in Q3 and remain slightly positive in Q4, implying average growth of 4.5% for 2022. In addition, CPI-inflation is likely to go further up substantially in the coming months, to around 25% yoy by December. All this can be described as a rather strong statement compared to current expectations. On GDP, the minister's annual growth number is just a repetition of the government's latest prediction, but his Q3 forecast is vastly different from the suggestion of the MNB's WEAI leading indicator, which vice governor Virág has brought up in his regular monthly appearances lately. Most recently, the WEAI, which has proven to be a very useful indicator so far, predicted roughly 0% yoy GDP growth for Q3, suggesting already marginally negative growth for the week ending on September 18, with a rather clear trend pointing moderately downwards. The MNB's standing projection for the year is 3-4%, which is significantly weaker than the government's, given they issued it at end-September.  On inflation, the MNB's Q3 inflation report expected December CPI-inflation in the range of 19.2-22% yoy, and the median of analysts expectations is still 22% yoy for the same month. All this is also way below Mr. Nagy's new short-term prediction, of course. BUT: Mr. Nagy is still the economy minister, who is supposed to have more information than ordinary private sector analysts. In addition, Mr. Nagy is most certainly a highly skilled economist, rather than an empty-headed politician, who could make totally unrealistic statements without a blink of an eye. Doing that would be especially...