Real GDP is estimated to have grown by 1.8% in 2022, driven primarily by strong growth in private consumption, which was still regaining the ground lost during the acute phase of the pandemic. However, the inflation surge in the second half of the year, which weighed on household disposable income, combined with an investment slowdown, resulted in negative economic growth in the third quarter. As these factors persist throughout the winter, growth is expected to remain lacklustre at the start of 2023. Thereafter, with inflation moderating, domestic consumption is set to pick up. Additionally, EU funded investments, including those financed by the RRF, are projected to pick up, providing a further boost to economic growth in the second half of 2023. However, given the decline in activity in second half of 2022 and, hence, the negative carry-over, yearly growth in 2023 is expected to be almost flat.
In 2024, growth is forecast to pick up to 2.7%. A marked slowdown in inflation is set to foster private consumption. A further increase in EU-funded investments and a decline in prices of construction materials are expected to boost investment, even though higher interest rates are set to dampen this effect. Export growth is projected to pick up as the inflation slowdown elsewhere in the EU boosts foreign demand.
Consumer price inflation increased rapidly throughout the year and averaged at 17.2% in 2022. It appears to have peaked in the third quarter of 2022. Energy prices are set to continue slightly declining during 2023, after having peaked in 2022-Q3. In 2023, headline inflation is forecast to remain elevated at 7.9% as the energy price shock works its way through the other inflation components. In 2024, inflation is expected to slow down to 1.5% as energy prices decline somewhat and growth of other prices slows down, except for services inflation, which is set to accelerate as wages partially catch up with the price increase of the past years.