European Commission sees Hungary economy contracting 7 pc in 2020 – UPDATE

The European Commission forecasts a 7 percent slump in Hungary’s economy this year followed by a 6 percent rebound in 2021.

The novel coronavirus pandemic hit Hungary after years of above-average growth, the EC’S spring report released on Wednesday notes.

Although the virus has spread only to a limited extent in Hungary, this year’s economic performance would depend on domestic economic policy decisions, the EC said.

The pandemic hit hardest the tourism and transport sectors, which make up half of the services sector in the country. The international recession may badly impact the Hungarian processing industry, despite relatively mild restrictions in the industrial sector, it added.

Investments are expected to fall by 18.7 percent before rebounding by 8.9 percent in 2021.

Inflation is set to decline to 3.0 percent from last year’s rate of 3.4 percent.

The budget deficit is seen jumping to 5.2 percent of GDP from 2.0 percent last year due to a fall in tax revenues. The EC put the deficit at 4.0 percent for 2021.