GKI: How long can excessive economic growth last?

According to April-May data, the growth rate of the Hungarian economy started to slow down in the second quarter compared to the record high dynamism of the first quarter. However, the extent of the slowdown is lower than expected. In addition, the weather seems to be more favourable for agriculture than it was in the past. As a result, GKI raised its 2019 GDP growth forecast from 4 per cent to 4.3 per cent. However, in the second half of the year, the growth rate is expected to slow down significantly, to around 3.5 per cent. An important reason for this is that due to the high level of EU transfers last year, their investment stimulating effects are decreasing this year and the increase of the purchasing power of households is also slowing down. In addition, the EU’s economic sentiment index is almost at its three-year low; the Hungarian one is at its two-and-a-half year low and the German business confidence index, which is very important for Hungary, is at its five-year nadir.

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The archive of earlier forecasts is available here.

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