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IMF Raises Hungary’s Growth Forecast As Deputy Director Hails “Low Inflationary Pressure”

Tamás Székely 2015.05.11.

The International Monetary Fund (IMF) raised its forecast for Hungary’s economic growth in its Regional Economic Issues report. Growth could reach 2.7% this year according to the new report. The forecast was raised from 2.3% in the previous report published in October 2014. For 2016, the IMF expects growth of 2.3%.

According to IMF, Hungary’s real domestic demand could grow at a slower pace, with 1.1% growth expected in 2015, down from a 2.5% growth forecast in October. Export growth is projected at 6.2% compared with 5.3%. Real private consumption could grow 2.6%, faster than the previous forecast of 1.5%, the report said. Average inflation in 2015 is now seen flat-lining, compared with 2.3% predicted earlier. The budget deficit is projected at 2.7% in 2015, somewhat lower than the 2.8% forecast earlier, while public debt will be 75.5% of GDP, down from 79.2% forecast in the previous report.

The Hungarian central bank (MNB) should continue its monetary easing in light of the economy’s low inflationary pressure, Jörg Decressin, Deputy Director of IMF’s European Department, told a press conference at the National Bank of Hungary. Decressin welcomed the MNB’s efforts against a decline in consumer prices, adding that once a deflationary period has started, it was very difficult put an end to it.

In response to the favourable IMF report, Hungary’s Economy Ministry said that “more and more international think tanks and economic institutions were upgrading their forecasts on Hungary’ economic outlook.”. The IMF report is another milestone in this process, the Ministry pointed out. The European Commission published last week the latest prognosis on the state of the Hungarian economy, forecasting that Hungary’s economy is set to grow by 2.8 percent in 2015 instead of the prior estimate of 2.4 percent. Hungary’s Convergence Programme, which was submitted to the European Commission in April 2015, predicts that the economy will expand by 3.1 percent in 2015 and by 2.5 percent in 2016.

 via imf.org, hungarymatters.hu and kormany.hu photo: mon.hu