Hungary Economic Forecast

Hungary Economic Outlook

October 1, 2019

Early indicators for the third quarter offer some respite, after growth fell to a one-year low in Q2. Industrial activity rose at the fastest pace in over two years in July, thanks to a marked acceleration in manufacturing. At the same time, exports rebounded strongly in the month. Moreover, retail sales growth climbed in July amid a continued fall in inflation, which boosted households’ purchasing power, while confidence among consumers was markedly less pessimistic in August–September, jumping to a near 17-year high in September. On the downside, business sentiment dived to a near six-year low in September, after strengthening in August, thus boding ill for fixed investment. Meanwhile, in the political arena, Central Bank Governor Gyorgy Matolcsy and Finance Minister Mihaly Varga clashed after Matolcsy publicly criticized Varga’s calls for fiscal discipline and instead prescribed a broad economic stimulus to tackle the slowdown.

Hungary Economic Growth

The economy is seen losing traction this year and next. Domestic demand is projected to weaken next year, as fixed investment growth decelerates sharply on a tapering of EU funds and private consumption growth moderates as the rate of job creation slows. Meanwhile, export growth is seen slowing. Challenging external conditions pose the main downside risks to the outlook. FocusEconomics analysts see growth at 4.4% in 2019 and at 3.0% in 2020, which is up 0.1 percentage points from last month’s forecast.

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Hungary Facts

Bond Yield2.030.0 %Sep 04
Exchange Rate298.6-0.68 %Sep 04
Stock Market39,7530.04 %Sep 04

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