The European Commission raised its projection for Hungary’s GDP growth this year to 4.6 percent from 4.4 percent in a quarterly forecast released on Thursday.
The government’s official projection for GDP growth this year is 4.0 percent, but Finance Minister Mihály Varga said earlier that higher-than-expected first-half growth of 5.1 percent could lift full-year growth to 4.3-4.4 percent.
The EC left its forecast for next year’s GDP growth unchanged at 2.8 percent. It put GDP growth in 2021 at 2.8 percent.
The EC acknowledged in the autumn European Economic Forecast that Hungary had managed to withstand the global slowdown thanks to a domestic construction boom and a revival of the automotive industry, but it said support from these factors is “set to fade toward the end of 2019”, augured by a slowdown in construction industry growth and contracting order books.
The EC projects private consumption growth will slow from 4.9 percent in 2019 to 3.8 percent in 2020 and 3.4 percent in 2021. Household consumption is set to “slow gradually” as lower GDP growth limits labour demand and constrains further real income gains, it said.
The European Commission sees investment growth plunging from 17.0 percent in 2019 to 2.1 percent in 2020 and 2.6 percent in 2021. Public investment is set to fall after Hungary’s absorption of European Union funds peaked in 2019, but private investment its seen rising further as real estate projects already in the pipeline are completed and several big manufacturing sector investments are completed, it said.
The consumer price index, harmonised for better comparison with other EU member states, will decline from 3.4 percent in 2019 to 3.1 percent in 2020 and 3.0 percent in 2021, the forecast said.
The EC projects the budget deficit, relative to GDP, will narrow from 1.8 percent in 2019 to 1.0 percent in 2020 and 0.8 percent in 2021.
The EC publishes economic forecasts for member states four times a year, but the forecasts published in summer and winter only cover GDP and inflation.