Hungary in 2023: Orban Faces Perfect Storm

(L-R) European Commission Executive Vice-President Valdis Dombrovskis, EU Commissioner for Budget Johannes Hahn and European Commissioner for Justice Didier Reynders, announce the freezing of funds to Hungary  in Brussels, Belgium, 30 November 2022. EPA-EFE/OLIVIER HOSLET Dual-track approach

2023 will show whether the prime minister is capable of leading Hungary out of a crisis much of its own making, and back into the arms of its EU allies. Or whether the country will spiral out further towards the periphery of the EU.

Experts say the government's strategy is likely to be twofold: it will try to tackle some of the root causes of the problems and rectify the financial imbalances, but at the same time pump up the volume of its domestic propaganda to place the blame on foreign actors for the economic difficulties that are mostly homegrown.

The first half of the year will be spent in "survival mode": high energy prices, rising inflation, low foreign reserves, constant downward pressure on the currency and a nightmarish situation of stagflation will leave little room of manoeuvre for Orban. State investments are on hold, unemployment currently at a relatively low 4 per cent is expected to start rising, while poverty, inequality and deprivation will almost certainly worsen in 2023.

The optimistic view is that disputes with the EU will be toned down - at least temporarily. The government will try to convince its fellow EU member states that it is fulfilling the 27 "super-milestones" set out by the European Commission to properly address the corruption of EU funds. In this case, money from the EU's pandemic recovery fund and the EU budget structural funds - up to 12 billion euros - will be gradually disbursed, providing a...