IMF raises Hungary GDP growth, inflation forecasts for 2017, 2018

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The International Monetary Fund (IMF) increased its projections for economic growth in Hungary for this year and the next, and also raised its forecasts for annual average inflation for both years in its fresh World Economic Outlook published on Tuesday, Hungarian news agency MTI reported.

The IMF now expects GDP growth in Hungary to pick up from 2% last year to 2.9% in 2017, rather than to 2.5% as in the previous outlook released in October 2016. It also raised its forecast for 2018 growth to 3.0%, up from just 2.1%.

The report contains the main forecasts for Hungary without added comment.

The projection is still well under the governmentʼs respective official forecasts. In an update last December, the Hungarian Ministry for National Economy raised its forecast for 2017 GDP growth from 3.1% to 4.1%, and projected a further slight acceleration in the growth rate in 2018, to 4.3%, citing the expected boost in employment, growth and consumption following a six-year wage agreement signed one month earlier.

The IMF now forecasts Hungarian consumer prices to rise on average by 2.5% this year and by 3.3% in 2018, significantly quicker than the respective 0.8% and 2.6% rates projected in the October report.

The IMFʼs recent projections exceed the Hungarian ministryʼs projections for 1.6% average annual inflation in Hungary in 2017 and 3.1% in 2018.

The IMF now sees Hungaryʼs current account surplus narrowing to 3.7% of GDP in 2017, rather than to 4.6%, and projects less squeeze next year, to 3.0% instead of 1.4% of GDP. Part of the change could stem from a lower than forecast current account surplus in 2016, at 4.3% of GDP.

The IMF now projects Hungaryʼs unemployment rate to fall to 4.4% this year after a larger than foreseen fall to 4.9% last year. Last October, it expected the jobless rate to drop to 6.0% in 2016 and to 5.8% in 2017. The fund now projects the rate dropping slightly further, to 4.3% in 2018.

The IMF raised its forecast for 2017 global economic growth marginally, to 3.5%, after 3.1% growth last year. The forecast for 2018 is 3.6%.

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