GKI raises growth forecast

Thanks to better results in the 4th quarter of 2020 and the relatively favourable changes in business confidence in early 2021, GKI raised its 2021 growth forecast by 0.6 percentage point to 4.3 percent. GKI says the level of employment and unemployment will stay more or less the same in 2021. Real wages will increase by 2 percent, consumption will grow by 3.5 percent and the level of investment will elevate by 6 percent.

Fiscal deficit will reduce but will remain very high, 6.5 percent of the GDP after last year’s 8.1 percent. Inflation will speed up from 3.3 percent in 2020 to 3.9 percent. The forint’s weakening will continue, so after HUF 351 in 2020 one euro will cost HUF 365 in 2021.

Last year consumption was down 2.6 percent, but in 2021 it has the chance to grow by 3.5 percent. Hungary still won’t reach the 2019 investment level this year. Although cheap money is available for the investment projects of companies, many businesses have decided to postpone their investments.

In 2020 the level of unemployment augmented by 0.8 percentage point to 4.1 percent. The 2020 budget deficit was HUF 5,549 billion, 15 times bigger than stipulated by the Budget Act; in 2021 it is expected to drop to HUF 3,700 billion. //