Magazine: Hungary’s economy at the time of the parliamentary elections

Attila Udvardi
GKI

According to GKI Economic Research Zrt., GDP growth will be 3.8 percent and the investment rate will increase by 9 percent in 2018 in Hungary. The level of consumption will improve 4 percent, the inflation rate will be 2.7 percent and the unemployment rate will be 3.7 percent. Even this record-level economic growth constitutes a medium performance in the region, and it is mainly the result of the influx of EU money and the government’s steps to vitalise the economy before the elections. Typical problems of the Hungarian economy are that competition is killed, human capital is eroding and that the country is becoming isolated.

2018 is the sixth year in a row that consumption has been growing. Real wages will increase by 4.5 percent. Industrial production was up in 2017, although the growth slowed down in the fourth quarter. Agriculture’s contribution to the GDP dropped 9 percent and the gross output was down 5 percent last year. Unfortunately no positive change can be expected this year either. Retail turnover expanded by 4.9 percent and this year is likely to bring a 4.5 percent growth.

In 2017 Hungary’s export of products and services increased by 7.1 percent (measured as a proportion of the GDP) but import developed even faster, by 9.7 percent. In 2018 this dynamics is expected to be 6 percent and 7.5 percent, respectively. Just like in 2017, in goods foreign trade’s surplus will continue to decrease this year (from the EUR 9.7 billon in 2016 to EUR 8.1 billion to EUR 7 billion), but in services the surplus will rise. //