Rapid growth this year, slowing down next year

Attila Udvardi
research manager
GKI

While most forecasts say growth is going to be at 4-4.5 percent this year, for next year experts foresee a 3-3.5 percent growth – with the exception of the Hungarian government. (GKI’s forecast for 2018 is 4.2 percent and for 2019 it is 3.2 percent.) The reason behind the slowdown next year is the lower level of EU-financed investments and the possible reduction in the consumption of the population in 2019; what is more, the lasting of Europe’s economic upturn is also uncertain.

Gross wages will grow by 7-8 percent this year, but in 2019 only a 3-4 percent wage increase is likely. In September 2018 the level of inflation reached 3.6 percent. In the 3rd quarter of the year one euro cost 324 forints. The unemployment rate is the fourth lowest in the EU, behind the Czech Republic, Germany and Poland. However, there are almost as many public workers as unemployed in Hungary. Using the EU’s methodology, the budget deficit will be around 2.2 percent this year. The government debt is expected to be a bit more than 73 percent of the GDP. GKI forecasts a bigger budget deficit but a smaller government debt for 2019.