Hungary’s economy entered a technical recession in the fourth quarter of last year, while Romania’s economy ended 2022 stronger than analysts expected in the context of Central and Eastern Europe facing a life crisis, Reuters and Nasdaq.com reported.

The countries of the Eastern European Union faced the risks of falling into recession due to a sharp rise in energy and food prices, which forced consumers to cut their monthly expenses.

At the same time, companies make great efforts to maintain the level of sales in conditions of high inflation.

Data at the end of January show that the Czech economy entered a mild recession in the second half of last year.

Data released by Hungary on Tuesday showed the same thing: the country, led by Viktor Orbán, recorded a second consecutive quarter of economic contraction.

Hungary’s GDP shrank by 0.4% year-on-year after a 0.7% decline in Q3 2022.

Overall, however, Hungary’s economy grew by 0.4% in 2022. But this was not enough to prevent the Hungarian economy from falling into a technical recession.

“At the moment, we see a realistic possibility that GDP will also contract in the first quarter of 2023, so that it can then start to recover to pre-crisis levels,” said Peter Wirovac, an economist at ING.

Bad news for Hungary, positive data for Romania

Slovakia, by contrast, posted quarterly growth of 0.3%, while for the whole of last year the country’s GDP grew by 1.1%, slightly exceeding economists’ expectations.

There are signs that inflation in central Europe peaked earlier this year, giving some sense of security to central banks that decided to leave key interest rates unchanged after tightening monetary policy in 2021 and 2022 as inflationary pressures began to mount.

As for Romania, data published on Tuesday by the National Institute of Statistics show economic growth of 4.8% in 2022.

According to the agency, gross domestic product in the fourth quarter of 2022 increased by 1.1% in real terms compared to the third quarter of 2022. Compared to the same quarter in 2021, it registered growth of 4.6% on a gross basis and 5% on a seasonally adjusted basis.

The outbreak of war in Ukraine almost a year ago has added to inflationary pressures caused by the COVID-19 pandemic, causing shocks in energy markets and a sharp rise in electricity and natural gas prices.

Hungary was the European country with the highest inflation rate in January this year, reaching 25.7%.