The OECD raised its growth forecast for this year to 3.9 percent from 3.8 percent in the previous Economic Outlook released in June, and raised its 2018 forecast to 3.6 percent from 3.4 percent. It forecast economic growth at 2.8 percent in 2019. The OECD said Hungary’s economic growth would continue to rely on domestic demand. Public infrastructure spending will benefit from European Union funding and business investment from cheap credit, it added.
Home subsidies will further boost the construction sector, and higher real wages and employment will support continued growth of private consumption, the OECD said. Inflation could be pushed “towards 4 percent” by end-2019, it added. Scaling back the government’s public work programme at a faster pace could ease labour market shortages as well as inflation pressures, while public infrastructure and business investments could boost productivity more than expected, preserving external competitiveness, the OECD said. “On the other hand, a rise in geopolitical tensions would reduce European growth with a negative impact on Hungarian exports,” it added.
In a statement released after the OECD published the Economic Outlook, the Hungarian Economy Ministry said international organisations, analysts, ratings agencies and investors had acknowledged the achievements and positive outlook of the Hungarian economy. “The government will continue its economic policy based on raising wages, reducing taxes and strengthening competitiveness,” it added.