Compared to prior expectations, the study of the Paris-based Organization for Economic Cooperation and Development (OECD) released earlier today is more optimistic about the future of the Hungarian economy.

In light of OECD’s Economic Outlook, the improved Hungarian macro-economic path is mainly the result of rebounding domestic demand, while indicators on unemployment and state debt have also changed in a positive direction. In the opinion of the OECD, the rate of inflation will be around 0 percent this year and it reaches the 3 percent target by the end of 2016.

The study found that bank refunds resulting from new provisions on forex loans will likely boost household consumption in 2015 and improve the financial stability of the banking system; however, lower banking profits may cause a further drop in lending. The GDP growth estimates of the Government and the European Commission for the next two years are both higher than that of the OECD.

The study also reports that world economic prospects have worsened since the last Outlook was published in May 2014 and global growth will also remain subdued. The Outlook is expecting global economic growth to be 3.3 percent this year and 3.7 percent next year. Future economic prospects of the euro-zone are bleaker, as GDP growth among the bloc’s members will average 0.8 percent in 2014 and 1.1 percent in 2015.

The OECD predicts that Hungary’s economy will expand by 3.3 percent in 2014, by 2.1 percent in 2015 and by 1.7 percent in 2016. These figures are well above those prognosticated in the former Outlook, while the outlook for both global and euro-zone growth has deteriorated.

(Ministry for National Economy)