Page 55 - CE Outlook Regions 2022

3.3 Real economy - Hungary

3.3.1 Retail

The high inoculation rate by early May, over 50%, helped
Hungary to open its economy earlier than its regional peers. The
early opening of restaurants and hotels, hit hardest by pandemic
restrictions and receiving little support from the government,
proved to be a lifesaver for many. Tourisms and catering in
popular holiday resorts broke new records, while businesses in
Budapest struggled.

Retail sales showed a significant upside surprise from September
just at the time as the engines of industry sputtered. In Q3, retail
sales were already close to the pre-crisis level. The composition
of economic growth is tilting towards domestic demand and
investments in H1 2022, while external demand should pick up
substantially from mid-2022.

Household consumption is forecast to benefit from robust income
gains, government support measures and buoyant consumer
confidence. Stimulus measures aimed at boosting consumption in
2022 include a one-time income tax refund to families with
children, an income tax cut for workers under age 25, the
re-introduction of the 13th monthly pension and administrative
wage increases.

The budgetary impact of the planned refund of income tax to
families, which will take place in early 2022, is more than 1% of
GDP but will have a deficit-increasing impact as well. Retail sales
are slated to accelerate to double-digit growth in 2022 from 3.4%
in 2021.

55 CE Outlook 2022 www.intellinews.com