An economic slowdown has started

In the 2nd quarter the Hungarian economy was growing by 4.9 percent; this rate was faster than expected and the fastest in the European Union. However, an economic slowdown has already started, as in the 1st quarter the economic expansion was 5.3 percent. GKI’s forecast for 2019 is a 4.3-percent GDP growth, which is the same as the expectation of the government and the Central Bank of Hungary (MNB).

Attila Udvardi
head of research
GKI

In the first half of the year domestic demand increased by 5.5 percent, faster than the GDP (which was 5.1 percent), but in the second half of the year only plus 3.5 percent is likely. The government deficit is planned to be 1.8 percent this year. As for the inflation rate, it will be 3.5 percent in 2019 and most probably 3.3 percent next year. The forint will keep weakening, with one euro costing around 330 forints by the end of 2019 and 335 forints in 2020.

Economic expectations are worsening in both the EU and Hungary. The business confidence index plunged in September, producing the biggest monthly decline in more than 10 years. Real wages have been increasing in Hungary since 2013, but the growth is losing speed: after the plus 8.2 percent in 2018 plus 6.5 percent is likely in 2019 (and plus 4.5 percent in 2020). For the second half of 2019 GKI calculates with a slowdown in practically all sectors, which will continue in 2020. Domestic consumption is going to exceed the GDP growth even more than this year. //