The recovery in the European economy could begin as early as mid-May, Gergely Suppan, chief analyst of Hungary’s Takarékbank, told news portal Mandiner in an interview.
“We could already see the situation stabilize in May, followed by a slow, gradual recovery. Austria and Germany are currently planning to cautiously begin opening their shops, and from the middle of May their hotels and restaurants,” Suppan said. “This mild optimism is also supported by the declining trend of new coronavirus cases and fatalities.”
He said that at this point any forecasts are necessarily flawed.
“While it is almost impossible to make accurate forecasts as the situation changes day by day, we still have to base our estimates on something,” he said.
The latest Hungarian macroeconomic data released by the Central Statistics Office (KSH) only shows the economic situation at the end of February, when the pandemic had not yet reached the country. In that month, industrial production was up 4.1 percent year-on-year, tourism revenues up 21 percent and retail trade up by 10.9 percent.
While some forecasts show that the European economy is running at only 66 percent of capacity, Suppan is more optimistic regarding European and Hungarian full-year economic performance.
“The decline of the Hungarian economy could be relatively less severe. If for nothing else, we are starting from a very high level. Last year, the Hungarian economy grew by 5 percent and even if we fall in parallel with others, this will mean a less severe reduction,” he said. “The fall could also be cushioned by a double-digit wage increase agreement over most of the public sector and the ongoing large-scale investments which haven’t been canceled.”
His most optimistic forecast for the year is a 1.4 percent decline.
“Being the ideal scenario, this could obviously be worse or much worse,” he said.
Another Hungarian bank, ING, currently forecasts a 0.8 percent reduction in the country’s GDP this year. The majority of analysts, based on data from previous epidemics, expect a v-shaped recovery, meaning that after bottoming out, economic performance will begin an immediate recovery that will also be as steep, or at least nearly as steep, as the downward slope was.
Title image: Police officers patrol in front of a closed shop in Székesfehérvár, central Hungary on April 7. (MTI/Tamás Vasvári)
