The MNB raised its forecast for growth of household consumer expenditures next year to 5.0% from 3.8% in the previous Inflation Report published in September.
“Looking ahead, a steadily dynamic rise in consumption is suggested by the positive developments in income, the pick-up in lending and the improvement in households’ assets,” the MNB said. “As a result, domestic demand may become increasingly important in the structure of economic growth,” it added.
The MNB raised its projection for investment growth to 11.2% from 8.3%. It said the decline in the relative price of capital and the low interest rate environment would encourage investments that boost productivity. Investments will increase in 2017 and 2018, following a decline in 2016, “driven by greenfield foreign direct investment and the public sector”, it added.
The main figures of the Inflation Report were released by the MNB after a policy meeting on Tuesday. It raised its projection for average annual inflation next year to 2.4% from 2.3% in the previous report released in September. A chart published with the data shows the 3% mid-term inflation target will be met early in 2018, rather than in the middle of 2018.
The central bank also raised the projection for GDP growth in 2017 to 3.6% from 3%. In its first forecasts for 2018, the MNB projects average annual inflation of 3% and GDP growth of 3.7%.
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