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May 05, 2016

European Commission: Hungary's GDP to continue growth path in 2016 and 2017

European Commission predicts Hungary's GDP to rise even higher than originally thought

Hungary’s GDP is expected to grow by 2.5 percent in 2016 and 2.8 percent in 2017, according to the European Commission (EC).

Additionally, investment potentials are expected to suffer less decline than originally predicted, helped by measures to boost the housing market and by more state investment.

All findings are an increase on figures projected last winter, reported news agency MTI.

Following improvements in 2014 and 2015, the general government deficit is expected to stabilize at 2 percent of GDP “despite a significantly increased fiscal room,” the EC said, basing its forecast on a no-policy change assumption.

The EC expects the structural budget balance to deteriorate sharply, to a further -2.9 percent of GDP in 2016 and then – based on the same no-policy-change assumption - to reverse to around -2.5 percent in 2017.

Both figures are up from the respective -2.5 percent and -2.2 percent of the winter forecast. In addition to the cyclical upturn, the deterioration reflects one-offs, the EC said.

After dropping 0.9 of a percentage point to 75.3 percent last year, Hungary’s state debt as a percentage of GDP will remain on a declining path, dropping to 74.3 percent at the end of 2016 and to 73 percent at the end of next year, “even though delays in the receipt of EU funds are assumed to have a debt-increasing effect throughout the forecast horizon,” the Commission said.

The 2017-end figure was raised 0.6 of a percentage point from the winter forecast.