Hungary: 2022 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Hungary

International Monetary Fund

No 2023/070, IMF Staff Country Reports from International Monetary Fund

Abstract: The 2022 Article IV Consultation with Hungary highlights that while the economy was recovering from the coronavirus disease-crisis, a succession of shocks and loose fiscal policy intensified inflation and fueled a large external deficit. Appropriately, the central bank significantly tightened monetary policy and the government plans a large fiscal adjustment. However, regulatory measures undermine the tighter fiscal and monetary policy mix. Growth is expected to slow sharply with still-elevated inflation and sizable risks can worsen the outlook. Consistent overall policy tightening is needed to address imbalances amid large uncertainty. Shocks that significantly weaken growth and inflation may prompt a more gradual tightening, while shocks that intensify inflation would require a faster tightening. Strengthening energy security will help meet climate objectives and reduce vulnerabilities to supply shocks. Strengthening governance is needed to improve the business environment and the efficiency of spending.

Keywords: Policy recommendation; monetary policy mix; liability positions vis-à-vis nonresident; monetary policy transmission; inflation expectation; money market rate; reducing inflation; EU funds; Policy discussion; Inflation; Energy prices; Current account deficits; Fiscal stance; Global; Europe (search for similar items in EconPapers)
Pages: 63
Date: 2023-02-03
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