Hungary Economic Forecast

Hungary Economic Outlook

October 30, 2018

Solid growth appears to have carried over into the third quarter, following an outstanding performance in the second quarter which was underpinned by surging private consumption and fixed investment. Despite the increase in inflation, retail sales growth was strong in July–August, suggesting consumer spending—although cooling somewhat—remained in the driver’s seat. Moreover, the continued front-loading of EU funds was likely behind the strengthening of the industrial sector and, coupled with highly favorable financing conditions and sustained business confidence, contributed to the surge in construction output in the first two months of Q3. On a less positive note, there was a sizable widening in the general government’s budget deficit in the first nine months of the year due to strong spending on EU co-funded projects. Furthermore, in July–August the external environment seemingly remained unsupportive, extending Q2’s dynamics, as imports growth outpaced that of exports. Following an EU-wide trend, in early October the parliament approved new regulations to grant the government greater control over investment from outside the EU in sensitive sectors.

Hungary Economic Growth

In 2019, growth should remain solid although moderating from this year’s peak. Household spending will continue to increase robustly, although slowing wage growth will weigh on its pace of expansion. Additionally, lower EU fund inflows will lead to a softer rise in investment. Lingering tensions with EU institutions could weigh on investor sentiment, while waning appetite for emerging market assets could drag on GDP growth. Met the why particular panelists see the economy expanding 3.2% in 2019, unchanged from last month’s forecast, and 2.5% in 2020.

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Hungary Facts

Bond Yield3.670.0 %Nov 15
Exchange Rate284.3-0.68 %Nov 15
Stock Market39,0710.04 %Nov 15

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