Hungary’s GDP growth forecasted for 2018

Economic research company Pénzügykutató has revised upwards its GDP growth forecast for Hungary to 3.9 percent this year from an earlier 3.7 percent prediction.

The forecast is under the government’s official projection of a 4.3 percent GDP growth for 2018.

Growth is supported by a favourable international environment, accelerated absorption of EU funding, a strong agricultural sector, loose budgetary and income policy and monetary policy stimulating the economy, said Pénzügykutató researcher Éva Várhegyi on Wednesday.

Inflation could be around 2.3 percent this year, unemployment could fall as low as 3.5 percent and investments could grow by 9 percent.

The tight labour market is expected to drive income growth, but the pace should be below last year’s 13 percent rise, she said.

The National Bank of Hungary is expected to keep its base rate at 0.9 percent and its overnight deposit rate negative throughout the year, leaving interbank interest rates at around 0 percent. The current account surplus could drop to 2.3 billion euros or 1.8 percent of GDP but the external financing capacity of the country could be at 5.6 billion euros because of EU transfers.

Economic research company Századvég also raised its GDP growth forecast for this year to 4.1 percent in an update released on Wednesday.

The raise was based on the industrial output and retail sales data released early in the year, which turned out better than expected.

Századvég projects investment growth of 7.2 percent, supported by EU-funded capital expenditures and new home construction. It sees exports climbing by 5.7 percent and imports by 6 percent.

Századvég puts average annual inflation at 2.6 percent.

Source: MTI