Hungary has 'good chance' to avoid recession, minister says

© Reuters. FILE PHOTO: Hungarian Finance Minister Mihaly Varga speaks during a business conference in Budapest, Hungary, June 9, 2021. REUTERS/Bernadett Szabo

BUDAPEST (Reuters) -Hungary has a "good chance" to avoid recession, with economic growth seen slowing to around 1% next year, Finance Minister Mihaly Varga told a business conference on Monday.

Varga said growth would slow down next year but gain pace again from the second half of 2023.

"According to our calculations, Hungary's economic growth will be around 4.5% this year," Varga told a business forum organised by the American Chamber of Business in Hungary.

He said a high investment rate and a strong labour market would continue to support the economy, while strong consumption levels were expected to ease amid high inflation.

"No negative effect of the war (in Ukraine) is seen on employment data. Labour demand has remained strong in the third quarter as well," Varga said.

"Unlike several (European Union) countries, Hungary has a good chance to avoid economic recession with an economic growth of approximately 1%. In 2023 or 2024 we will gradually return to the previous growth path at around 4%."

Varga added that he hoped the budget would again post a surplus in October after a 181 billion forint ($433.6 million)surplus last month, helped by government steps to rein in spending.

Varga said he was confident that a funding agreement with the European Union, which has frozen funds to Hungary over corruption concerns, could be reached before the end of this year.

($1 = 417.4800 forints)