The European Commission projects an economic contraction of 7 percent in Hungary this year, though it expects a rebound in 2021, with annual growth of 6 percent.
Its summer economic forecast for Hungary published on Tuesday is unchanged from its projection released early in May.
Household consumption will shrink while investments will “plummet”,
the report said, adding that “several ongoing projects are likely to be cancelled or put on hold” because of the recession. It noted that many Hungarian companies specialise in “highly cyclical products” such as automotive products, and a sharp drop in exports was likely.
Consumer prices are set to rise 3.5 percent in 2020, lifted by high food prices, before easing to 2.8 percent in 2021, according to the forecast.
The EC said the Czech Republic’s economy is likely to contract this year by 7.8 percent and Poland’s is expected to decline by 4.6 percent. The forecast for Slovakia is a contraction of 9 percent.
The European economy will face a “deeper recession” than previously predicted due to the prolonged containment measures against COVID-19, the European Commission said in its Summer 2020 Economic Forecast on Tuesday.
The euro area economy is forecast to contract by about 8.75 percent in 2020 before recovering by 6 percent next year, said the Commission.
Meanwhile, the European Union (EU) economy is forecast to contract by 8.3 percent in 2020 and grow by 5.8 percent in 2021, it added.
Compared with the spring forecast published in May, the summer one’s projection on the economic contraction in 2020 are somewhat dimmer and recovery in 2021 slower.
In its spring forecast, the Commission projected that the euro area economy would contract by 7.75 percent in 2020 and grow by 6.25 percent in 2021, and the EU economy was forecast to contract by 7.5 percent in 2020 and grow by around 6 percent in 2021.