Hungary’s economy is expected to grow by 2.2% next year, slowing down from 2.8% this year, the European Commission said in its Spring 2015 Economic Forecast. “Hungary’s real GDP grew by an impressive 3.6% in 2014, but is set to slow down to more sustainable levels of 2.8% in 2015 and 2.2 % in 2016 as growth-supporting factors, such as a record EU funds absorption, lose strength,” the report said, adding that the budget deficit is expected to fall below 2.5% of GDP, citing “the strong economic recovery and improvements in tax administration” among factors for improved revenues.
It also forecast falling employment. “In 2014, the unemployment rate decreased to a low of 7.7% and is forecast to decline further” to 6.8% in 2015 and 6% in 2016. Domestic demand is expected to remain the main driver of economic growth, but with a shift from investment to private consumption, it said, adding that new mortgage rules are expected to raise households’ real disposable income as banks will have to reimburse revenues considered to have been unfairly collected. The Commission forecast the public debt declining by more than 1 percentage point annually in both 2015 and 2016, falling to below 74% of GDP by the end of 2016.
Last week the Hungarian government raised this year’s economic growth projection from 2.5 per cent to date to 3.1 per cent, Péter Benő Banai, state secretary for budgetary affairs told television channel M1. The state secretary also said that the Government submitted both Hungary’s Convergence Programme and National Reform Programme to the European Commission. According to the Hungarian convergence programme, the growth rate of the Hungarian economy will be 2.5 per cent in 2016.
via hungarymatters.hu, ec.europa.eu and kormany.hu photo: euractiv.com