Promising start of the year – what comes next is uncertain

According to GKI Economic Research, the favourable growth rate and inflation data at the beginning of the year are mainly the result of transitional factors, but at the same time the company forecasts a bit more dynamic economy and lower inflation level for 2014 than they earlier expected. The upturn in Europe’s economy will stimulate Hungarian export and EU funding will result in more investments. In the first two months of 2014 performance improved dynamically in most sectors: industrial production was up 7 percent and there was a 10-percent export growth. Retail turnover augmented by 6.5 percent (by 4 percent if tobacco product sales are calculated the old way). In Q1 2014 the level of unemployment was 8.3 percent – in Q1 2013 it was 11.8 percent. The gross average wage became 1.3 percent higher and net wages increased just as much. Retail sales are expected to climb 2 percent and consumption will probably expand by 1.5 percent this year. In Q1 2014 the budget deficit exceeded 70 percent of the 2014 target, so it is certain that corrections will have to be made.