Inflation could reach 10.3% in 2022 and fall to 7.1% in 2023, still above the central bank’s target. The slowdown in inflation is conditional on the end of the war and the strengthening of the forint and the normalisation of energy prices. Wages could rise by an average of 16.5% this year and 10.1% next year, i.e. above inflation in both years.

Among balance indicators, fiscal balance is expected to improve over the forecast horizon, with the deficit at 4.4% of GDP in 2022 and 3.5% in 2023, above the 3.0% threshold. The current account deficit, however, looks significant, at 7.3% of GDP this year and 5.5% of GDP next year. In addition to the increase in domestic demand, the deteriorating balance is also significantly influenced by the rise in global energy prices.

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