Hungary Economic Forecast

Hungary Economic Outlook

January 8, 2019

Economic activity seemingly remained robust in the fourth quarter of 2018, after strong consumer spending and surging fixed investment drove the third-quarter expansion. In October, growth in the industrial sector picked up on the back of solid car production and retail sales continued to expand sturdily, buttressed by a tight labor market and soaring wages. Although the economic environment remains bright, the political scenario is more turbulent. In order to address the problem of rising labor shortages, in mid-December the Hungarian parliament approved a law which increases the amount of overtime working hours employers can demand their workers to take on. Moreover, in a move which could spark further clashes with EU institutions, the National Assembly passed another law creating a new court system to arbitrate on administrative matters, which will be overseen by the justice minister. Although both laws prompted opposition parties to take to the streets, protests are unlikely to represent a serious challenge to the government due to the political diversity among the opposition and the high approval rating of Prime Minister Viktor Orban.

Hungary Economic Growth

Consumer spending is expected to moderate this year, on higher inflation and softer job gains, while the expansion in fixed investment should slow due to a slower absorption of EU funds. Milder domestic demand will lead to a deceleration in GDP growth, which will nevertheless remain solid. Moreover, healthy growth will lead to a further decline in the public-debt-to-GDP ratio. Met the why particular panelists see the economy expanding 3.4% in 2019, up 0.2 percentage points from last month’s forecast, and 2.6% in 2020.

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Hungary Facts

Bond Yield2.910.0 %Jan 30
Exchange Rate274.9-0.68 %Jan 30
Stock Market11,8630.04 %Jan 30

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