At its September meeting, the Monetary Council of the central bank continued monetary easing after maintaining the base rate the previous month. Thus, the base rate in Hungary currently stands at 6.5%.
In July, retail sales increased by 2.5% year on year on both a raw and calendar-adjusted basis. Within this, compared to the same period of the previous year, sales increased by 2.0% in specialised and non-specialised food shops and by 3.8% in non-food retailing, while sales decreased by 0.6% in automotive fuel retailing.
Measured up to August 2024, the value of the monthly SZIGMA CI indicator, which provides a snapshot of the current state of the Hungarian economy, was -0.308. This is down from the previous month’s index value of -0.252. This means that the growth rate of the Hungarian economy is moving away from its historical trend rate, in other words, economic growth momentum is slowing.
The most recent estimate of the other indicator, SZIGMA LEAD, a short-term forward-looking indicator for the Hungarian economy, forecasts continued above-trend and slightly improving growth until the end of the forecast horizon.
In August 2024, consumer prices rose by 3.4% on average year on year.
The deceleration in the growth rate of the Hungarian economy is typically driven by lower external demand and investment
In September 2024, the value of the SZIGMA CI indicator reflecting the current state of the Hungarian economy was -0.308 up to August 2024. This represents a weakening from the previous month’s index value of -0.252. This means that the growth rate of the Hungarian economy is moving away from its historical trend rate, in other words, economic growth momentum is slowing. This is supported by the Hungarian GDP forecasts for 2024 published in September, in which the expectations from the beginning of this year were revised downwards in the current forecast. The deceleration in the growth rate of the Hungarian economy is typically driven by lower external demand and investment. The industrial data also show a contraction in external demand, with the volume of export orders declining, while the volume of domestic orders is showing a slight pick-up. Given that the stock of orders also determines subsequent sales, the evolution of export and domestic sales volumes can be observed in the short term. Given that export sales accounted for 62% of total industrial sales in the first seven months of 2024, the change in export volumes has a substantial impact on industrial output.
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.
