Economic research company: Hungary economy to grow above 4 pc in 2017

Budapest (MTI) – Hungary’s economy is likely to grow at a rate above 4 percent this year thanks to a pick-up in investments and higher consumption, economic research company Pénzügykutató said in a forecast released on Wednesday.

Also an influx of EU funding could boost growth this year, the think-tank said. This could be further fuelled by looser fiscal policy before next year’s general election, it added.

Economic growth could receive a big boost from a growth in investments, which are expected to rise by 16 percent on a low base, the think-tank said.

Structural problems are expected to persist, however, holding back growth, it said.

Inflation could average around 2.7 percent this year if the central bank sticks to its 0.9 percent base rate, the think-tank said.

Pénzügykutató said the public debt was likely to drop to 72.4 percent of GDP by the end of the year. It may be lower still if growth is stronger than expected or if the forint strengthens.

Average wages are projected to grow by 10 percent with real wages up 7.1 percent, it said. Around 4.45 million workers are expected to be employed during the year, with unemployment at around 200,000 job seekers, translating into a jobless rate of 4.3 percent. Employment growth could hit the buffers, however, due to a labour shortage, it added.

Exports in euro terms are expected to rise by 4 percent while imports are likely to grow by 6 percent, meaning that the foreign trade surplus could shrink compared with last year, when exports grew by 2.9 percent while imports were up 1.5 percent.

Source: MTI