Hungary Economic Forecast

Hungary Economic Outlook

September 3, 2019

A second estimate confirmed the economy lost some traction in the second quarter amid a challenging external environment. Growth, in annual terms, fell to a one-year low in Q2 on faltering domestic demand and a slump in the external sector, reflecting a sharp deceleration in exports; that said, the expansion was still relatively robust. At the same time, signs of overheating continued to emerge, with labor shortages intensifying despite higher participation rates as the unemployment rate slid further in the quarter. Turning to the third quarter, business sentiment deteriorated again in July although a notable bounce-back in August signaled brighter prospects for fixed investment. Moreover, slightly less downbeat consumer confidence and still elevated wage growth in the same two months should encourage greater household spending, as suggested by robust retail sales in July.

Hungary Economic Growth

Growth is seen decelerating this year on weaker domestic demand as the absorption of EU funds tapers off. Nevertheless, the expansion should remain robust thanks to a rebound in government spending; a pick-up in export growth; and solid private consumption, sustained by a tight labor market. FocusEconomics analysts see growth at 4.3% in 2019, which is up 0.1 percentage points from last month’s forecast, and at 2.9% in 2020.

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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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