National Bank of Hungary forecasts faster economic growth for 2018
The National Bank of Hungary on Tuesday said in a preliminary release of the main forecasts from its quarterly Inflation Report due on Thursday that economic growth could reach 4.7 percent in 2018, higher than the 4.4 percent growth it forecast earlier.
The NBH is projecting 2.8 percent inflation for this year, unchanged from the September edition of its Inflation Report.
The central bank is also sticking to its forecast for next year’s economic growth, projecting a rate of 3.5 percent but it lowered its expected inflation rate by 0.2 percentage points to 2.9 percent.
For 2020 the NBH expects 3 percent inflation and 3 percent GDP growth, both in line with its previous forecast.
In a first set of projections NBH also said that inflation and GDP could both grow by 3 percent in 2021.
Revisions of older data meanwhile raised the GDP growth figure for 2017 by 0.1 percentage point to 4.1 percent.
A fan chart published on Tuesday indicates that NBH expects CPI to be above the 3 percent mid-term target early 2019 but to fall below the target after Q1 as inflation trends continue to be volatile. CPI is again seen nearing the 3 percent target by early 2020.
The NBH puts the inflation target in a +/-1 percent tolerance band.
The official government forecasts for GDP growth are 4.3 percent for 2018 and 4.1 percent for 2019.
Source: MTI
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1 Comment
The European Union has accepted the new budget of Italy. Where the budget deficit first amounted to around 2.4%, it was reduced to 2.04% in the new plans. Since 2007 the Italian debt has risen from 99.8% of the Gross National Income (GNI) to 131% at the moment. Such a thing is of course too high in times of economic growth, but Rome did it anyway. The question is why. In any case in the context of stability agreements the European Union decided to start a criminal procedure, but Brussels will return to it and will now hoist the white flag. A victory for Salvini’s Italy but a damper to the financial stability of the EU. And, of course, Brussels was no different. The Italians want an equal treatment and as long as Macron and the French continue to borrow it would seem hypocritical when Brussels is only chasing the Italians. For opponents of the European Union, this seems to have taken another step towards the collapse of the European financial system. Debts continue to rise in the South and with rising interest rates and the world economy is cooling off, Spain, Italy and Greece are beginning to feel pain again. But that pain can then be passed on, on account of the stability of the EU in the richer countries. Read: The Netherlands. Fortunately for Brussels, the Netherlands has conducted relatively strict policies under PM Rutte by squeezing the citizens here because of the euro project remains possible.
In 2007 we were really very good at it. At that time the Dutch debt was only 42% of GNI. With this the Dutch were assured of some buffers in the expensive crisis period to borrow money and to ease the pain. That is what the Dutch government did. In 2014, the debt reached a peak of 68%. That was higher than the European Stability Pact and in recent years the national debt became smaller again. This came naturally because the economy grew considerably and the debts were therefore relatively less high. After all the debt percentage is contrasted with the GNI that is variable and can fall during a recession.
The Italians have succeeded in any case to avoid the criminal proceedings from Brussels but whether the Italians will start to feel the consequences of their reckless financial policy within a period of 2 or 3 years remains the question. Anyway, the raising of the white flag once again shows that the European Union is barely able to forge a financial union at all.
It certainly will be a good sign for Hungary to ease some ‘procedures’ because we all are equal (or not?) By standing firm the EU will grant a debt, because in other European member states the GNI is (far) too high. Look at France!