EC expects Hungary’s economy to grow despite VW, China
Although Hungary could be negatively affected by the Volkswagen emission scandal and China’s slowdown, the country is expected to expand “fairly robustly and in a more sustainable way,” marketwatch.com reported today citing the European Commission’s fall forecast.
“An escalation of the Volkswagen crisis could affect Hungarian production negatively in the long run,” the executive of the European Union said, as the automotive sector is the main engine of the country’s industry, marketwatch.com reported.
Considering Germany is Hungary’s biggest export market, the slowdown in China could carry indirect negative effects on the country’s economy through Germany, marketwatch.com added.
The European Commission also said that the “arrival of asylum seekers does not fundamentally affect the countryʼs macroeconomic outlook.” Since Hungary sealed off its Serbian and Croatian border, no refugees cross the country anymore on their way to Germany. Related to the situation, Hungary’s Prime Minister Viktor Orbán said at the end of October that the country “entered a new time zone” and does “not understand” EUʼs negotiations related to the matter.
The projected growth of Hungary’s economy for this year is put to 2.9% and to 2.2% for the next year, with growth rebounding in 2017 and reaching 2.5%, Hungarian news agency MTI reported. The EC raised its projection for this year from 2.8%, according to a report published in May, while it kept the 2016 forecast unchanged.
Commenting on last year’s economic growth, the European Commission said that Hungary’s economy grew at an “exceptional rate” of 3.7%, MTI reported.
“Growth figures over this forecast horizon are heavily influenced by Hungary’s absorption of EU funds, which helped propel investment growth to 11.2% in 2014 and which, after a timid increase this year, may lead to temporarily negative figures in 2016. From 2017, funds from the current programing period of EU funding will start to positively affect investment again,” the EC said, according to MTI.
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