Hungary Economic Forecast

Hungary Economic Outlook

May 7, 2019

Despite upbeat first-quarter indicators, analysts expect last year’s growth spurt to be petering out amid a more challenging external-sector backdrop. Domestic demand still looks to be in the driver’s seat. Both the labor market and consumer confidence have notched gains in recent months, while industrial-sector capacity constraints and the ongoing construction boom have likely buoyed fixed investment. Some cracks have begun to appear, however. Business confidence plunged to a two-year low in April and, more broadly, higher inflation since the outset of the year is expected to take its toll. In early May, all eyes were on Moody’s in the run-up to its credit-rating call—now postponed. Ahead of any announcement, strong fundamentals and well-managed public finances bode well for an upgrade to its Baa3 credit rating—although analysts remain split on the matter.

Hungary Economic Growth

Household spending and fixed investment should get reined in this year by slower employment growth and the narrower intake of EU-linked structural funds, respectively. Higher inflation is only expected to compound matters, while short-term growth prospects for the European Union remain a downside risk for the economy. FocusEconomics analysts expect growth of 3.6% in 2019, which is up 0.1 percentage points from last month’s forecast, and 2.7% in 2020.

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Hungary Facts

Bond Yield3.330.0 %May 13
Exchange Rate288.7-0.68 %May 13
Stock Market40,5380.04 %May 13

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