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Nov 30, 2017

OECD raises economic growth forecasts for Hungary

The Economy Ministry said international organizations, analysts, ratings agencies and investors continue to acknowledge the achievements and positive outlook of the Hungarian economy

The Organisation for Economic Co-operation and Development (OECD) has raised economic growth forecasts for Hungary, it has been announced.

In its biannual Economic Outlook released on Tuesday, the OECD raised its growth forecast for this year to 3.9 percent from 3.8 percent in the previous report released in June, and raised its 2018 forecast to 3.6 percent from 3.4 percent. The organization forecasts economic growth at 2.8 percent in 2019.

The Economy Ministry said international organizations, analysts, ratings agencies and investors continue to acknowledge the achievements and positive outlook of the Hungarian economy. “The government will continue its economic policy based on raising wages, reducing taxes and strengthening competitiveness,” the ministry said.

According to MTI, the OECD said Hungary’s economic growth would continue to rely on domestic demand. Public infrastructure spending will benefit from European Union funding and business investment from cheap credit, the report added.

The OECD added that home subsidies will further boost the construction sector, and higher real wages and employment will support continued growth of private consumption. Inflation could be pushed “towards 4 percent” by end-2019, it added.

The organization also offered other suggestions, including scaling back the government’s public work program at a faster pace could ease labor market shortages as well as inflation pressures, while public infrastructure and business investments could boost productivity more than expected, preserving external competitiveness.

“On the other hand, a rise in geopolitical tensions would reduce European growth with a negative impact on Hungarian exports,” the OECD concluded.