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Feb 08, 2019

The EC raises its projection for Hungary’s GDP growth to 3.4 percent in 2019

In a relatively low estimate, the European Commission has predicted that there will only be a 2.6 percent growth in 2020, due to a slowdown in global growth

The European Commission has raised its projection for Hungary’s GDP growth to 3.4 percent in 2019 in a quarterly forecast released on Thursday.

According to MTI, the projection was raised from 3.2 percent in a forecast published in November, but is still well under the government’s forecast of 3.9 percent growth this year.

In a relatively low estimate, the European Commission has predicted that there will only be a 2.6 percent growth in 2020, due to a slowdown in global growth.

In a country note, the European Commission acknowledged that Hungary’s GDP growth had accelerated to almost 5 percent in 2018 but said the domestic cycle “has reached its peak”.

Investment growth is forecast “to stabilize at a high level” relative to GDP in the coming years as the absorption of EU funds peaks and a temporary VAT reduction on home construction expires.

The EC sees consumption growth “moderating” as the economy absorbs its labor reserves and employment and income growth slow. The EC said strong demand and labor cost growth is fueling core inflation, but subdued oil prices are expected to keep headline inflation near 3 percent in 2019 and 2020.