The Hungarian National Bank (MNB) has fine-tuned its macroeconomic forecasts in its fresh quarterly Inflation Report. MNB has reduced its projection for investment growth this year to 2.2% from an earlier forecast of 5.2%. Gross fixed capital formation decreased in the first quarter, mainly because of a fall in public sector investments after the utilisation of European Union monies peaked as the 2007-2013 funding cycle wound up, the bank said.
The Hungarian central bank projected investments would decline by 2.1% in 2016, even more than the 1.2% drop forecast in the previous report published in March. Household consumption was forecast to rise by 3.2% this year and by 3% next year. Exports were forecast to grow by 8% this year and 7.9% next year, according to the fresh report.
MNB also reduced its projections for core inflation, which excludes volatile fuel and food prices. Core inflation this year was projected at 1.5%, down from an earlier forecast of 1.6%. It reduced the forecast for 2016 to 2.8% from 3.0%. Hungary’s EU-based budget deficit is forecast to be 2.2% of gross domestic product (GDP) next year, over the 2% target included in the budget, the report said.
Earlier this week, MNB’s Monetary Council has reviewed the latest economic and financial developments and voted to reduce the central bank base rate by 15 basis points from 1.65% to 1.50%. The cut was in line with market expectations. “The medium-term achievement of the inflation target points to the direction of further, slight easing of the policy rate,” the rate-setting Monetary Council said in a statement on Tuesday.
via hungarymatters.hu and mnb.hu photo: public domain