The rate of growth was 2 percent of GDP, above the EU average, in 2016, and thus Hungary has continued to narrow the economic gap with the EU. The country achieved growth without the inflow of EU funding. Thanks to the recently brokered wage deal, Hungary’s economic growth is expected to pick up this year.

In Q4 2016, the GDP increased by 1.6 percent year-on-year and by 0.4 percent, quarter-on-quarter. In the year 2016, GDP rose altogether 2 percent, driven by the agricultural and market services sector.

Although the pace of growth was below that of 2015, it had been caused mainly by the cyclicality of the absorption of EU funds. Some indicators, however, point to stronger external and internal balances. The foreign trade sector posted an unprecedented surplus of EUR 10bn; while the deficit of the general government budget was also well below the 3 percent threshold.

The recently concluded six-year wage agreement is expected to result in faster economic growth through boosting competitiveness and demand. In the Macro-Economic and Budget Outlook published in December 2016, the Ministry for National Economy prognosticates economic growth of 4.1 percent for 2017 and 4.3 percent for 2018. The European Commission’s recently revealed Economic Forecast is also predicting that growth is to accelerate.

(Ministry for National Economy)