Macro Monitor – May 2024


At its May meeting, the Monetary Council of the central bank continued to cut both the policy rate and the base rate, as it had done in the previous month. As a result, the base rate (and the policy rate) in Hungary is currently at 7.25%, after a 50 basis point cut.

In March, turnover of retail stores increased by 4.2% year on year on both a raw and calendar-adjusted basis. Within this, sales increased by 5.7% in specialised and non-specialised food retailing, while it decreased by 0.6% in non-food retailing. The turnover volume of petrol stations increased by 3.3% compared to the same period last year.

Measured up to April 2024, the value of the monthly SZIGMA CI indicator, which provides a snapshot of the current state of the Hungarian economy, was 0.072. This is down from the previous month’s index value of 0.223. Nevertheless, the Hungarian economy still grew at a rate above its historical trend rate.

The other indicator, SZIGMA LEAD, a short-term indicator for the future of the Hungarian economy, forecasts a return to below-trend growth by the end of the forecast period. Although the slope of the declining growth rate has become less steep, the Hungarian economy continues to experience a slowdown in growth.

In April 2024, consumer prices rose by an average of 3.7% on an annual basis.

Hungary’s GDP above the EU average compared to the previous quarter

According to data published by the Hungarian Central Statistical Office, the performance of the Hungarian economy increased in Q1 2024 (by 0.8%) compared to the previous quarter, on a seasonally and calendar-adjusted and balanced basis. On an annual basis, gross domestic product rose by 1.1% in Q1 2024, based on raw data, and by 1.7% on a seasonally and calendar-adjusted basis. Preliminary data show that in Q1 2024 the GDP was held back mainly by industry. While market services (including real estate transactions and information and communication) boosted GDP performance.

The international comparison shows that, based on Eurostat’s preliminary (first estimate) ranking of seasonally adjusted annual GDP for Q1 2024, Hungary’s GDP was in the top third of the 24-strong ranking, with a growth rate of 1.7%, the sixth highest performance. In Q1 2024, Cyprus achieved the highest annual GDP growth rate with 3.3%. Next came Lithuania (2.9%), Slovakia (2.7%) and Spain (2.4%). Then Romania and Slovenia, both with 1.8% of GDP. In addition to Hungary, Bulgaria achieved 1.7% GDP growth

On a quarter-on-quarter basis, Hungary’s GDP growth rate of 0.8% in the Q1 2024 was the third best in the 24-strong ranking. On a quarter-on-quarter basis, the highest GDP growth rate (1.2%) was also achieved by Cyprus, followed by Ireland with GDP growth of 1.1%. The EU average (EU27) and the euro area (EA20) grew by 0.3% quarter on quarter. At quarterly level, GDP fell in three Member States (the Netherlands, Sweden and Estonia). The Netherlands and Sweden experienced a 0.1% drop in GDP, while Estonia suffered a 0.4% drop. One of Hungary’s important partners, Germany, achieved a GDP growth of 0.2% quarter on quarter, but recorded a year on year decline of 0.2%.

• 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.