Budapest, March 21 (MTI) – Think-tank Századvég projects low inflation and economic growth of 2.4 percent this year and 3 percent next year.

Inflation is expected to be 0.8 percent this year and 1.8 percent next year, Századvég said in a forecast published on Monday.

Higher growth will be supported by an expected increase in consumption, higher wages, lower taxes and expanded family tax allowances, the think-tank said.

A slowdown in investments this year is projected because less European Union funding will be drawn down. Projects for the 2007-2013 financing period have drawn to a close and tapping resources for the 2014-2020 financing period is expected to start only gradually. The family home-building allowance (Csok) could boost investment, Szazadveg said, adding that positive effects are likely to be felt from the second half of this year.

Net exports will continue to support economic growth in 2016 but a possible slowdown in the economies of foreign trade partners, mainly in China, represents risks, it said.

Higher economic growth next year is primarily supported by a projected pick-up in investments, growing consumption and net exports. However, the growth rate of both exports and imports in 2017 is likely to slow down from previous years.

Inflation is expected to grow more slowly than previously expected. This is projected to result from a low external inflation environment and low oil prices. However, a possible increase in world market oil prices could boost headline which could be in the central bank’s target inflation band by the end of 2017.

The forint rate against the euro is expected to remain stable and real wages are projected to grow. Gross wages will grow faster than inflation in both years, by 4.5 percent in 2016 and 4.7 percent in 2017.

Századvég expects the budget balance to further improve thanks to economic growth and measures to whiten the economy.

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

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