Compared to the previous forecast, in the latest spring study the European Commission has turned markedly more upbeat on the Hungarian economy’s outlook. Despite the upward revision of growth estimates, the new figures are still below those of the Government of Hungary.

In the Converge Programme, the Government is predicting GDP growth of 4.3 percent for 2018 and 4.1 percent for 2019. The prognosis of Brussels is 4 percent for this year and 3.2 percent for next year. In the opinion of the Government, wage hikes are set to result in higher earnings and consequently higher consumption growth than the Commission’s estimate, and these factors have led to higher growth estimates.

The Commission highlights the fact that wage hikes and investment growth will help maintain the current robust rate of growth. They predict that the rate of investment growth is to rise to some 25 percent by 2019. Double-digit growth is expected to be the result of the accelerated absorption of EU funds and the implementation of planned corporate capacity expansion projects.

According to both the Commission’s report and the Convergence Programme, rapid economic growth and a fiscal deficit of steadily below 3 percent of GDP will help maintain the existing downward trend in the government debt-to-GDP ratio. The Commission prognosticates a government debt-to-GDP ratio of 73.3 percent by 2018 and 71 percent for 2019.

(Ministry for National Economy)