Hungary Economic Forecast

Hungary Economic Outlook

November 27, 2018

The Hungarian economy continued to fire on all cylinders in the third quarter, most likely supported by buoyant domestic demand. Strong wage gains coupled with solid retail sales growth throughout the quarter suggest consumer spending remained in the driver’s seat in Q3. Moreover, solid credit growth, upbeat business confidence and surging construction output point to another quarter of sustained fixed investment expansion, which also likely benefited from rising inflows of EU funds. On the other hand, the external sector weakened, due to a marked cooling in Germany’s automotive industry. Moving to the final quarter of the year, available data suggests business activity remains resilient, while consumer confidence lost some steam, probably due to rising inflation. In order to address rising concerns of a significant slowdown in the real estate sector when the preferential VAT regime expires, the finance minister announced the government will propose extending the reduced VAT for housing from the end of 2019 to the end of 2023.

Hungary Economic Growth

Although growth is set to moderate next year from this year’s outstanding performance, it will nonetheless remain healthy. The primary driver of the deceleration will be a marked slowdown in fixed investment growth, due to a softer absorption of EU funds. Consumer spending will also likely lose some steam, as wage growth gradually declines and job growth slows. Met the why particular panelists see the economy expanding 3.2% in 2019, unchanged from last month’s forecast, and 2.6% in 2020.

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Hungary Facts

Bond Yield3.300.0 %Dec 14
Exchange Rate286.3-0.68 %Dec 14
Stock Market11,1260.04 %Dec 14

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