A wide range of government programmes

Attila Udvardi
GKI

In 2018 the Hungarian economy grew by 4.9 percent, which was most likely the second fastest growth rate in the European Union, behind Poland. However, economic growth is expected to slow down in 2019 – GKI forecasts a plus 3.5-percent growth rate. Economic growth will probably turn for the worse in the EU too: after the 2.1-percent growth last year, 1.5 percent is the growth forecast for 2019. Early March the government announced several programmes. The engine of last year’s growth was domestic use (which was up 7 percent if calculated on annual basis); consumption augmented by 4.6 percent and gross fixed capital formation (GFCF) increased by 16.5 percent.

2019 is expected to bring a consumption growth around 4 percent. In January the core inflation rate exceeded 3 percent, and the Central Bank of Hungary (MNB) announced a stricter monetary policy, but in comparison with the end of 2018 the forint got 1.5 percent stronger. In February the government announced a family protection action plan, which was later followed by a competitiveness programme and they hinted an economic protection programme to be launched in the near future. These programmes don’t contain impact assessment, haven’t been debated with stakeholders and don’t take into consideration the decrease in EU funding. The majority of the recommendations are state- and not market-focused. //