The OECD has stuck to its forecast of Hungarian economic growth of 3.9 percent this year.
The projection in the Organisation for Economic Cooperation and Development’s biannual forecast released on Tuesday is below the government’s 4 percent target. The OECD reckons growth will be 3 percent next year.
Private consumption remains strong, helped by rising real incomes and high consumer confidence coupled with supportive macroeconomic policies, the report said. Investment growth is “buoyant”, supported by EU funding, housing subsidy schemes and expanding production capacity, it added.
Hungary’s GDP Growth Tops Europe: The Keys to Its Success
Hungary’s “strong recovery is an opportunity to introduce measures to improve fiscal sustainability, reduce old-age poverty and address access challenges in the pension and health system”, the OECD said. “Bolstering domestic SMEs should focus on improving business regulation, facilitating their integration into regional and national supply chains, and upgrading skills,” the report added.
EC Raises Hungary GDP Forecasts
Commenting on the report, Gábor Gion, state secretary for financial policy affairs, said the OECD’s forecast confirmed that Hungary was one of the most dynamically growing European Union member states. The document highlights the favourable effects of the government’s economic policy, including wage increases thanks to a six-year wage agreement and home subsidies which boost domestic demand, he added. The OECD’s forecast of 3.9 percent is close to the government target and Hungary’s growth will exceed the average growth of OECD members, as well as the EU average, Gion said.