Hungary's GDP is set to grow by 4.1 percent next year

The National Bank of Hungary (MNB) has also upped its 2017 GDP growth forecast in its fresh Inflation Report

Hungary has an expected GDP growth of 4.1 percent next year, while the budget deficit will remain below 3 percent and return to a falling trend thereafter, it has been revealed..

According to the Ministry of National Economy, in its macroeconomic forecast, this year’s EU-conform budget deficit is now forecast at between 2.1 and 2.3 percent of GDP, below the original 2.4 percent target but over the recently revised 1.7 percent-of-GDP target announced in November.

MTI reports that the deficit ratio would rise to 2.4 percent in 2017 from where it would gradually fall to 1.2 percent by 2020.

The ministry raised its growth forecast from 3.1 percent, citing the six-year wage agreement signed in November. It said it expected a slight acceleration in the growth rate in 2018 to 4.3 percent.

The ministry put this year’s growth at 2.1 percent, revising the earlier government forecast down from 2.5 percent. Hungary’s GDP rose by an unadjusted 2.0 percent in the first three quarters of 2016. GDP growth would gradually slow to 3.8 percent in 2019 and to 3.7 percent in 2020.

When preparing the forecast, the ministry assumed a 9 percent corporate tax rate and an unchanged revenue from the so-called extraordinary bank levy from 2017 throughout to 2020, among others.

The ministry left the official forecast for annual average inflation unchanged at 0.4 percent for 2016. It projects the rate to accelerate to 1.6 percent next year before rising to 3.1 percent in 2018.

Meanwhile, the National Bank of Hungary (MNB) also upped its 2017 GDP growth forecast in its fresh Inflation Report published on Tuesday. Now MNB forecasts 3.6 percent growth from 3 percent predicted three months earlier.

The central bank also raised its 2017 inflation forecast slightly, putting next year’s annual average inflation rate at 2.4 percent, up from the 2.3 percent rate projected in September. MNB left its 2016 projections unchanged, putting inflation at 0.4 percent and economic growth at 2.8 percent.