GKI raises growth forecast

Udvardi Attila
research leader
GKI

In Q2 2018 economic growth was 4.8 percent in Hungary – this was the fastest quarterly growth rate since 2005. Hungary’s GDP grew twice as fast as the European Union’s average. Because of the better than expected performance in Q2 2018, GKI raised its growth forecast from 4 percent to 4.2 percent, plus they increased the expected level of investment from 9 percent to 12 percent. However, 2019 is likely to bring a slowdown with a 3.2-percent GDP growth. The external balance will remain very good in 2019, inflation will speed up, and fiscal and monetary policy will become stricter only slowly.

Real wages are expected to get approximately 8 percent higher in 2018, but the wage increase will be less than half of this in 2019. Consumption growth – which has been going on for six years now – will peak at 4.5 percent this year, dropping by 1 percentage point in 2019. The level of investment, which was 21.5 percent in 2017, will grow to 23 percent in 2018 and it is expected to be around 23.5 percent in 2019. This level will mainly be the result of state-funded (and in the large part EU-financed) development projects.