GKI forecasts a 7-percent GDP drop for 2020

After the 6.1 percent decrease in the GDP in the first half of 2020, for the second half of the year, GKI forecasts an 8 percent decline in the gross domestic product of Hungary. For 2021 GKI envisages a 4.5 percent GDP growth, which is likely to start in the 2nd quarter.

Supposedly the country’s economic performance will only reach the 2019 GDP level in 2022. Real wages will only increase very little this year and the value of old age pensions will reduce. Social benefits will nominally stagnate and the revenues of enterprises will drop. Consequently, real income will decrease by 1-2 percent and there will be a 2.5 percent decline in consumption in 2020. In 2021 gross real wages have the chance to increase by 5 percent on average.

State debt rose from last year’s 66.4 percent to 78 percent of the GDP. The level of inflation had been 4.7 percent in early 2020, which reduced by mid-March, but it was back at 3.9 again by August. Hungary’s inflation rate is the highest in the European Union, where the average inflation was 0.4 percent in August; at the same time, there was a minus 0.2 percent deflation in the euro area. Prices increased in Hungary due to the rising food prices and the weakening of the forint. //