Macro Monitor – November 2023


At its November meeting, the Monetary Council of the central bank continued to cut both its policy rate and its base rate, as it had done the previous month. As a result, the Hungarian base rate (and the policy rate) currently stands at 11.5%, down 75 basis points.

Raw data show that retail sales decreased by 7.8%, while calendar-adjusted data show that it decreased by 7.3% in September 2023, compared to the same period of the previous year. Within this, sales decreased by 2.3% in specialised and non-specialised food shops and by 7.5% in non-food shops. The turnover volume of petrol stations fell by 19.9%, significantly more than the other main groups.

In November 2023, the value of the SZIGMA CI indicator, which provides feedback on the current state of the Hungarian economy, was -0.05 up to October 2023. This compares with -0.11 in the previous month, meaning that the growth rate of the Hungarian economy has continued to move closer, although only slightly, to its historical trend rate.

The other indicator, SZIGMA LEAD, is a short-term indicator for the future of the Hungarian economy. The indicator continued to show a two-way movement. It points to a positive economic growth above the historical trend, which is expected to stall later and reverse back to the historical trend with a sideways movement.

In a still higher interest rate and inflation environment, the trend towards a preference for premium Hungarian government bonds with above-inflation yields over those with fixed yields continued.

EU Member States’ GDP continued to deteriorate in Q3 2023

By international comparison, Hungarian GDP has moved up five places in Eurostat’s preliminary (first estimate) ranking based on seasonally adjusted annual GDP for Q3 2023. While Q2 Hungarian GDP was ranked third from the bottom of the ranking at -2.3%, in the current Q3 ranking it is more in the middle of the pack at -0.3%. (It was ranked ninth from the bottom of the rankings.) Ireland came last with -4.7%, with Estonia in penultimate place with a better performance (-2.5%). Hungary was ahead of Italy and Lithuania in the ranking, with annual GDP stagnation of 0.0%.

EU Member States’ GDP continued to deteriorate in Q3, as the EU27 average GDP continued to fall in Q1. While the EU27 average was 1.2% in Q1 and 0.5% in Q2, it was only 0.1% in Q3. In Q3 2023, the highest annual economic growth rates were recorded in Cyprus (2.2%), Romania (2.1%) and Portugal (1.9%).

Q3 2023 quarter-on-quarter GDP data put Hungary in third place, with GDP growth of 0.9%. Poland was first (1.4%), followed by Cyprus with 1.1% GDP growth. The EU27 average continued to stagnate (0.0%). The bottom three were Austria (-0.6%), Finland (-0.9%) and Ireland (-1.8%). In the ranking of 25 countries, GDP fell quarter on quarter in 11 Member States and the euro area, stagnated in 2 Member States and the EU average, while it increased in 10 Member States.

• The SZIGMA indicator system

The SZIGMA (abbreviation of the Hungarian name “Századvég Index a Gazdasági Momentum Alakulásáról”, in English: Századvég Index of the Development of Economic Momentum) is a simultaneous and preliminary indicator system developed by Századvég for the Hungarian economy.

It is crucial for economic policymakers and analysts to have an accurate picture of the state of the economy, but statistical data are often available with considerable delays. In contrast, the SZIGMA indicators provide information on the economic cycle and the business cycle within 30 days of the reference month, on a monthly basis.

The indicator system consists of two indicators, the SIGMA CI, which summarises the current state of the economy, i.e. information extracted from simultaneous variables, and the SIGMA LEAD, which provides preliminary information on the expected economic trajectory. A positive CI index means that economic growth is above the historical trend, and a negative CI index means that growth is below the historical trend. The SIGMA LEAD indicator provides a short-term forecast for a 9-month period. If the SIGMA LEAD indicator is positive, growth is expected to be above trend in 9 months’ time (i.e. three quarters of a year later), while if it is negative, growth is expected to be below trend in the near future.