Hungary’s economy entered recession in 2022 according to official data published Tuesday, as soaring energy prices drove inflation higher.
Hungarian GDP shrank by 0.4 percent in the last three months of 2022, after a fall of 0.7 percent during the third quarter, said the national statistics office KSH.
Hungary’s last technical recession — defined as at least two successive quarters of contraction — occurred in 2020 as the Covid-19 pandemic hit the economy.
The latest recession comes as Hungary reels from soaring inflation which reached an EU-high of almost 26 percent in January, the highest in the central European country since the mid-1990s.
Prime Minister Viktor Orban has blamed EU sanctions against Russia for the sky-high inflation which also saw energy and food prices jump by 52 percent and 44 percent in January respectively.
But experts point to the distorting effect created by government price caps on food and fuel, and fiscal austerity measures like cuts to household energy bill subsidies.
“As both households and corporates were forced to cope with crippling energy prices, domestic economic activity markedly slowed down,” said a bulletin by ING Bank analysts.
Economy Minister Mihaly Varga, quoted by the Hungarian MTI news agency, said Tuesday that the recession is “a slight and temporary decrease” and that growth should quickly resume in 2023.
Over the whole of 2022, economic activity grew by 4.6 percent, compared to 7.1 percent in 2021.
“Despite a protracted war (in Ukraine) and sanctions, Hungary was still able to post annual growth in 2022,” said Varga, adding that unemployment remained low at around four percent.