Prognosis: Hungary to see record deterioration in living standards in 2023
2022 was a particularly challenging year for Hungarians. Record inflation paired with the sky-high overhead prices and the deteriorating forint exchange rate has all had negative effects on the living standards of people. Sadly, 2023 promises to be no better. What are the propects regarding this year’s wages and overall quality of life according to experts? Read on to find out.
There is a significant divergence between the government’s and the central bank’s forecasts for real wages, Portfolio reports. While the government expects minimal growth, the central bank expects a significant decline. According to macroeconomists, the latter scenario could materialise, but with an interesting twist.
Gross wages could rise by almost 16 percent this year, according to a government forecast published recently. Since the leadership expects inflation to be 15 percent, the forecast includes a small rise in real wages of less than 1 percent.
According to the central bank’s forecast in December, average gross wages in the national economy could rise by around 10 percent in 2023. Meanwhile a 12-13 percent wage increase is expected in the competitive sector. The National Bank expects inflation to be between 15 and 19.5 percent.
This means that the purchasing power of wages will fall even if the most optimistic inflation forecast, i.e. 15 percent, is used. And if it is closer to the most pessimistic one, 20 percent, Hungarians will face a huge decline in living standards.
The central bank is expecting a 4 percent fall in real gross wages in the competitive sector. Hungary has not seen such a fall since 2000.
Source: Portfolio.hu, kormany.hu