GKI expects the slowdown to continue

According to a forecast by GKI Economic Research Zrt., the slowdown of the Hungarian economy, which started in Q2 2015, will continue. Economic growth was 3.6 percent in Q1 and 2.7 percent in Q2 and summer figures indicate further loss of speed. At annual level, after last year’s 3.6-percent expansion this year a 2.7-percent GDP growth is likely. Industrial production and the output of the building and construction sector dropped in July and August from the level of the preceding months; Hungary’s export growth also lost momentum in the summer months. On the contrary, retail sales speeded up – however, the last four months of the year are likely to bring a slowdown. In the first eight months of 2015 gross wages increased by 3.7 percent in Hungary. The dynamics of real income and consumption will be around 2.5 percent this year. In 2016 this rate is expected to grow by only 1.5 percent. This year Hungary reached 107.5 percent of the year’s planned budget deficit already in the first nine months. GKI opines that the 2.4 percent budget deficit targeted in 2015 and the 2-percent deficit envisaged for 2016 are likely to be higher. In the first half of the year the external balance improved further.