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European Commission Remains Optimistic About Hungary's Economic Outlook

By Tamás Székely // 2015.11.06.

The European Commission sees Hungary’s economic growth at 2.9% this year, at 2.2% next year, and at 2.5% in 2017. According to the EC’s autumn forecast published on Thursday, Hungary will have a budget deficit of 2.3% this year, 2.1% in 2016 and 2.0% in 2017. The country’s public debt will amount to 75.8% of GDP this year, 74.5% in 2016 and 72.6% in 2017, according to the EC forecast.

Private consumption and external demand are both expected to drive growth, the EC said, noting the positive impact on household spending power of low inflation, high nominal wage growth, compensation from lenders, a planned cut in the rate of the personal income tax and strong labour market performance. The EC puts export growth at 7.7% in 2016 and 8% in 2017.Hungary’s unemployment rate is expected to fall close to 6% by 2017, although the EC noted that employment gains are due not only to private sector activity but an expansion of state-sponsored fostered work programmes. The EC said overall risks to the growth outlook were on the downside, adding that the arrival of asylum seekers does not fundamentally affect the country’s macroeconomic outlook.

Meanwhile the Hungarian Economy Ministry confirmed the country’s full-year deficit target of 2.4 % of GDP in this year, calculated according to European Union rules. Hungary posted a budget surplus of 138.4 billion forints in October, bringing the ten-month deficit to 816.2 billion forints (EUR 2.6bn), or 91.5% of the full-year target, the economy ministry said. The surplus was posted as a result of the arrival of a part of the hundreds of billions of forints in EU funding earlier suspended, as well as increased tax revenues, the ministry said. It compares with a tenmonth deficit of 809.6 billion forints in October last year. The ministry noted that the deficit is front-loaded, as usual, with expenditures exceeding revenue in the first half of the year.

via and MTI photo: