Hungarian economic research institute GKI has raised its forecast for Hungarian economic growth to 4.3 percent this year from a previous estimate of 4 percent.
GKI said that while in the second quarter economic growth did not match the first quarter’s record speed, the slowdown was less than expected, hence the improved forecast. They also said that a more marked slowdown to around 3.5 percent is expected for the second half of the year.
Rmx.news highlighted that the investment-boosting effect of European Union subsidies is less pronounced and the growth of the population’s purchasing power is also slowing down. Additionally, the business confidence in the European Union is at an almost three-year low, the Hungarian economy at a two-and-a-half year low while that of the German economy – a key influencer of Hungarian growth – is at a five-year low.
The forecast also mentioned that the 40 percent growth in constructions in the first five months of the year was both a result of a very low base figure and somewhat misleading price indices, but they still expect the construction sector to grow at around 20 percent for the full year.
GKI also pointed out that for the past year Hungarian inflation has been the second highest in the EU behind that of Romania and while in June it dropped to 3.4 percent year-on-year from 3.9 percent in May, the full-year depreciation is still expected at around 3.5 percent.