Hungary Economic Forecast

Hungary Economic Outlook

May 8, 2018

Fueled by buoyant domestic demand, strong momentum from the final quarter of 2017 likely carried over into this year. Soaring retail sales in the first three months of 2018 point to strong consumer spending, underpinned by extremely tight labor market conditions, robustly rising wages and improved consumer confidence. Moreover, public budget data for Q1 hints at a solid expansion in fixed investment, as pre-financing for EU-funded projects increased notably. Budget data also revealed that revenue from income tax and VAT jumped, another testimony to the economy’s good health. That said, above-potential growth could be leading to increased capacity bottlenecks. In the political arena, Prime Minister Viktor Orbán announced some reshuffling of his government after his landslide victory in April’s elections. However, the continuity of economic policy seems to be guaranteed by the confirmation of the current economy minister, Mihály Varga.

Hungary Economic Growth

Growth should remain vigorous but moderate somewhat in the second half of this year, held back by growing capacity constraints. Further inflows of EU funds and favorable financing conditions will spur fixed investment, while a strong labor market and robust wage growth is expected to buttress household spending. A buoyant domestic economy will, however, lead to some deterioration in the external balance, despite healthy external demand. Met the why particular panelists see the economy expanding 3.7% in 2018, unchanged from last month´s forecast. For 2019, the panel sees growth slowing to 3.1%.

Hungary Economy Data

20132014201520162017
Population (million)9.99.99.99.89.8
Economic Growth (GDP, annual variation in %)2.14.03.12.0-  
Consumption (annual variation in %)0.52.13.14.2-  
Investment (annual variation in %)9.89.91.9-15.5-  
Industrial Production (annual variation in %)1.47.37.10.8-  
Retail Sales (annual variation in %)1.85.15.74.8-  
Unemployment Rate11.17.76.15.1-  
Fiscal Balance (% of GDP)-2.6-2.1-1.6-1.8-  
Public Debt (% of GDP)76.675.774.774.1-  
Money (annual variation in %)4.49.07.59.6-  
Inflation Rate (CPI, annual variation in %, eop)0.4-0.90.91.8-  
Inflation Rate (HICP, annual variation in %, eop)0.6-0.91.01.8-  
Inflation (PPI, annual variation in %)0.50.1-1.30.5-  
Policy Interest Rate (%)3.002.111.350.90-  
Stock Market (annual variation in %)2.2-11.443.833.8-  
Exchange Rate (vs EUR)296.9308.7309.9311.5-  
Exchange Rate (vs EUR, aop)297.4316.6315.5309.2-  
Current Account (% of GDP)3.82.13.45.5-  
Current Account Balance (EUR bn)3.92.23.76.1-  
Trade Balance (USD billion)8.78.39.511.0-  
Exports (EUR billion)81.384.590.593.0-  
Imports (EUR billion)74.778.281.983.1-  
Exports (annual variation in %)1.74.07.02.9-  
Imports (annual variation in %)2.04.74.61.5-  
External Debt (% of GDP)11811511796.8-  

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Hungary Facts

ValueChangeDate
Bond Yield3.090.0 %May 16
Exchange Rate267.6-0.68 %May 16
Stock Market37,5750.04 %May 16

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