Budapest (MTI) – Hungarian economic output could is likely to around 2-2.5 percent in 2016 despite government growth-enhancing measures, Zoltan Torok, senior analyst at Raiffeisen Bank said on Tuesday.

The revamp of the home purchase subsidy system by the government could boost GDP by 0.3 percent a year in the medium term according to conservative estimates, while some say it could lift output by as much as 0.5 percent, said Torok. The measures could cost the state around 200-250 billion forints.

Inflation figures are rather weak, this year annual inflation could be around 1.5 percent, he said. Raiffeisen expects the National Bank of Hungary (NHB) to further lower its base rate to around 1pc by the middle of the year.

For 2017-2018 analysts at the bank expect GDP growth to increase to around 3 percent annually.

Torok said the fundamentals of economic development are favourable, but future prospects are discouraging. Investment in the manufacturing sector is low and even dynamically developing regions show strain on their labour markets.

There is a divide between the dynamically developing central Hungary and western Hungary where investments are strong and manufacturing capacity high and the rest of the country, especially the eastern parts.

The automotive industry, rubber production, the pharmaceutical industry and electricity production are performing well. These industries are dominated by big multinational companies that are willing and able to make serious investment projects, said Torok.

The analyst said the state of the labour market was “controversial”. In developed regions unemployment is low but in less developed regions without the government’s fostered work the situation would be difficult and unemployment would be as high as 20 percent in northern Hungary.

Photo: MTI

Source: http://mtva.hu/hu/hungary-matters

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