"The Hungarian economy and the energy situation and prospects for 2012-2013" short-term forecast published

From the Executive Summary:

The outlook of the Hungarian economy does not seem to be very bright for 2012-2013. In the best case GDP. on average, will be stagnating during these years. The present economic policy has caused serious confidence crisis among economic players and potential investors. The present economic situation foreshadows worsening economic tendencies. Another economic recession is forecast in Hungary for 2012, a decline by 1.5 per cent for GDP, by 2.5 per cent for consumption and by 4 per cent for investments is expected, only the trade balance will improve. There will be imposed budget restrictions, inflation will accelerate. Economic situation in year 2013 will depend on the success of the new convergence programme, on the agreement with EU-IMF and on its implementation. If so, in 2013 interest rates will decrease, the exchange rate will be more stable, sovereign debt will diminish and as a result of these all economic growth might start again.

The situation of the energy sector is worse than that of the whole economy. The crisis tax, the windfall tax, and the strict price regulation hinder the activity of the sector; there are no new investments and developments except for the existing ones. The energy policy has been underpinned in the last one and half years with new, important documents. However, no sign of steps towards the goals of the policy documents can be observed. On the other hand we are pressed for time to meet our goals of the “20-20-20” and launching the emission-trade in 2013 is also an urgent issue.

According to our survey conducted in March, 2012 the natural gas consumption of businesses will rise only modestly and demand for electricity will stagnate, fuel consumption will decrease. Companies expect 5-6 per cent rise in prices of gas and electricity, smaller companies predict a higher price rise. Intentions to change supplier of natural gas are diminishing, whilst in the case of electricity the strive for a change is strengthening. 

In the best case we expect a stagnating primary energy supply because demand in all of the sectors shows stagnation or even decreasing signs. No significant change is expected in t the structure of energy resources, but a smaller decrease in the proportion of hydrocarbons will continue and the share of imported electricity will rise. The proportion of domestically produced energy continues to decrease and that of the import will rise.

The pace of growth of domestic electricity consumption has diminished during 2010-2011 and as a consequence of the 2012 recession it will decrease in 2012. An increase is expected only in 2013, so on average we forecast a 0-0.5 per cent growth for the two years. The quantity and the proportion of imported electricity keeps on rising.. As a result of pressed demand, tight credit opportunities and extra taxes levied on the sector, and also the unpredictable legislation investments stopped and old units of the electricity production will close down.

Natural gas consumption is expected to stagnate or minor decrease might take place in 2012-2013. While household consumption will probably not change, the demand for gas in electricity will decrease and the demand of other sectors (industry, chemicals) will rise. The strict price regulation of the universal service and the cheap free market gas forced the increase of shipments from the Western markets and transparency has increased at handling cross border capacities. The state prefers its own companies to others whenever and wherever are possible.

We have only indirect information on oil and oil products market. Based on other type of statistics than energy statistics we can predict that demand for fuels will decrease further on in 2012, we expect a stronger decrease in petrol consumption around 3 per cent and 1 per cent decrease of gasoil. 

The renewable energy based electricity generation 2012-13 is expected to decline further. Investors wait for the new feed-in tariffs (METÁR).

Here again we call the attention to the fact that energy statistical service has disappeared or has been ceased during the stormy reorganisation of the government activity. There are no regular information leaflets, data releases and, moreover, the authorized office (Hungarian Energy Office) makes no reply to inquiries. We think; not only energy researchers are interested in energy statistics, but this deficiency hinders the whole energy sector too.

The publication can be ordered here