Budapest-based economic research company Pénzügykutató expects Hungary’s GDP growth rate to fall to 2.4% this year as investments slow. The company’s projection is well under the government’s latest forecast for growth of 2.8% – 2.9%. Hungary’s GDP rose by 3.6% last year. The firm said the budget deficit would remain under the 3%-of-GDP threshold, but achieving the 2.4% target could require cancelling budget reserves and new measures on the revenue side. Public debt is set to edge down to 76.2% of GDP by year-end from 76.9% at the end of last year. Average annual inflation is projected to reach -0.4% from -0.2% in 2014. The central bank could reduce the base rate as far as 1.60%, said Pénzügykutató researcher Éva Várhegyi.
Hungary’s government estimates GDP growth could reach 2.8-2.9% this year, Economy Minister Mihály Varga said, adding that the government’s official projection for GDP growth this year is 2.5% at present. Varga said it is not only the government but also analysts and institutions, including those critical of the government, saying that it is not unrealistic to expect around 3% GDP growth and the risks seen for 2015- 2016 tend to be positive rather than negative for Hungary.
Meanwhile Hungary’s National Bank (MNB) raised its forecast for 2015 economic output growth to 3.2%, the main figures of its fresh quarterly Inflation Report showed. The GDP forecast is sharply up from the 2.3% growth forecast in the previous report published in December. The bank also cut sharply its forecast for inflation in 2015, now expecting consumer prices to stagnate this year rather than increasing on average by 0.9% as projected in December. This might be one of the reasons why MNB’s rate setters cut the base rate by 15 basis points to 1.95% at a regular meeting on Tuesday.
via hungarymatters.hu photo: public domain