Economic research institute Századvég has lowered its GDP growth forecast to 3.1% for 2015 from 3.4% forecast in June. The economy was weaker than expected in the second quarter, the think-tank said, adding that the deterioration in the economic outlook is related to one-off factors which do not affect Hungary’s growth potential. Economic output is expected to grow by 2.5% in 2016 compared with 2.7% earlier forecast, it said. Annual inflation is reckoned to be 0.1% this year, lower than the 0.3% predicted earlier.
The institute said Hungary’s economic performance will be driven primarily by consumption and exports. Purchasing power could improve considerably due to the lowinflation environment and improving labour market conditions as well as the reduction of the personal income tax rate and the extension of the family tax benefit, Századvég said. Employment is seen falling to below 6 % by the end of 2016. Investments could decline in 2016 due to the closure of the previous EU financing period, the think-tank said. The government’s deficit target of 2.4 % of GDP is achievable, it added.
The Hungarian National Bank (MNB) also lowered its forecast for GDP growth this year by 0.1 percentage point to 3.2% yesterday, however, its projection for 2016 GDP growth remained at 2.5%. The central bank also lowered its inflation forecast for 2015 to zero from 0.3% in its fresh quarterly Inflation Report, while the projection for 2016 CPI was lowered by MNB to 1.9% from 2.4%. Domestic demand is likely to make an increasing contribution to economic growth as rising exports, improvement in the labour market, low inflation environment and the conversion of FX loans also support growth. However, a slowdown is expected in early 2016 as EU transfers decline, MNB said in its report.
via hungarymatters.hu and MTI