National Bank forecasts 5% inflation next year
The National Bank of Hungary (MNB) expects annual average inflation to shoot up to 5.0% next year from an expected 3.9% this year, sinking under the medium term 3.0% target of the bank in 2013 at 2.6%.
Next year’s inflation projection, issued MNB on Thursday, is higher than the 3.9% seen earlier.
"Monetary policy can facilitate the development of a predictable economic and financial environment
with a continued mild increase in the interest rate", MNB added.
"Inflation will be kept high by government measures and cost shocks next year, but by 2013 the effect of the weak demand environment will become the determining factor. Therefore, the inflation target is attainable in the first half of the year", MNB commented.
MNB now predicts 0.1% GDP growth next year after 1.4% this year, and 1.6% in 2013. It pencilled in 1.5% for next year early September, and 1.0% late September.
"The deepening of the European debt crisis and ensuring the sustainability of Hungarian public finances together result in a nearly stagnant economic situation in 2012, and growth is expected to be slow in 2013", MNB commented.
MNB expects the current account balance to be 3.8% in the black compared to GDP next year after a surplus of 2.1% this year, growing to 4.5% next year.
External financing capacity - the combined surplus on the country’s current and capital accounts - should be 4.2% of GDP this year, jumping to 6.4% next year and 7.8% in 2013.
"Country risk premiums are expected to remain at their current historically high levels in the short
run, before starting to decline slowly", MNB commented.
The government overall ESA balance is expected to turn out a 4.2% surplus of GDP this year, but deficits will return to the tune of 3.7% next year and 3.9% in 2013, MNB said.
The central bank predicts gross average earnings to grow 3.6% next year after rising 4.2% this year in the whole economy, and a further slow-down to 2.9% in 2013.
Employment should grow 0.8% this year in the whole economy, 2.9% next year and 0.2% in 2013.
Private sector gross average earnings will have probably risen 4.7% this year, and could grow 7.1% next year before slowing to 3.8% in 2013.
Private sector employment is expected to increase 1.2% this year, fall 0.2% next year and again growing in 2013 by 0.3%.
Unit labour costs in the private sector might increase 5.0% this year, 4.9% next year and 3.0% in 2013.
Households’ real income should grow 1.1% this year, fall 1.2% next year and decrease another 0.1% in 2013, MNB said in its Thursday forecast.
"The external and domestic conditions that are unfavourable for the banking sector will only improve very slowly. Accordingly, the balance sheet adjustment of the sector will continue until the end of the forecast period, and a further decline in outstanding corporate and household loans is expected, MNB said.
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