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Jun 21, 2016

Hungary's economy to grow by more than 3 percent in 2017

Global economic developments and Brexit are the biggest risks to Hungary’s economy this year

Economic research institute Századvég has said that Hungary’s economy is likely to grow by 2.1 percent this year and by 3.2 percent in 2017.

This anticipated growth rate this year will be lifted by a 4.1 percent increase in consumption and stronger exports.

The 2.1 percent projection for 2016 is below the government’s official target of 2.5 percent growth. The forecast for 2017 is slightly above the 3.1 percent target in the budget for that year.

Századvég said that it did not expect any more cuts to the bank’s key rate, although the inflation rate is expected to stay below the central bank’s target, .

The institute said the slowdown in growth in Q1 was only a temporary bump.

Investments are likely to fall by 5.8 percent this year as companies wait for the next wave of European Union funds, which make investments cheaper.

The research institute projected that a rise in investments and the drawdown of EU funds will raise the 2017 GDP growth rate to 3.2 percent.

Investments are expected to grow by 3.3 percent and consumption by 3.4 percent, thanks to rising wages.

Unemployment is seen falling to 5.6 percent in 2016 and to 5.4 percent in 2017. A growing number of sectors are facing labor shortages, which is likely to further lift wages.

Századvég lists global economic developments and Brexit as the biggest risks to Hungary’s economy.