EC sees Hungarian economy contracting by 7% this year
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The European Commission (EC) expects Hungaryʼs economy to contract by 7% this year, impacted by the coronavirus pandemic, state news wire MTI reports, citing a quarterly forecast released today.
Image by Lightspring/Shutterstock.com
"Economic activity is estimated to have begun contracting in March, and should reach its trough in the second quarter of 2020. A gradual economic recovery is projected in the second half of the year as containment measures are assumed to be gradually lifted," the EC said in the spring forecast.
"Constraints on industrial and construction activity remain moderate, but the international recession can hit manufacturing particularly strongly due to the dominant role of highly cyclical industries (e.g. automotive)," the EC warned.
Hungaryʼs government projects a 3% decline in GDP this year, but allows for a sharper drop if the pandemic drags on into Q3 or Q4.
The EUʼs executive body acknowledged initial government measures focused on liquidity provision as well as a moratorium on repayments for all retail and corporate borrowers but said the overall fiscal response "has been muted so far".
The EC projects Hungaryʼs unemployment rate will climb to 7% this year "due to the flexibility of the labor market".
It added that liquidity support and temporary job protection policy measures are expected "to provide limited containment only".
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