GKI raises GDP growth forecast for 2016 to 2.7%

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Economic research institute GKI has raised its GDP growth forecast for 2016 to 2.3% from its earlier projection of 2%, predicting 2.7% growth for this year, GKI chairman András Vértes said yesterday, according to Hungarian news agency MTI.

Investments are expected to decline by 5% next year after stagnating in 2015, and consumption could grow 2.5% in 2016, similar to this year, as real wages will grow by 4% both in 2015 and 2016.

GKI expects next yearʼs growth rate to be higher than earlier due to the base effect of the farm sectorʼs performance in 2015 and the positive impact of the reduction of the bank levy, Vértes said.

The trade surplus is set to grow spectacularly in 2015 and more slowly in 2016.

Inflation is set to accelerate to around 1.7% in 2016 from near-zero inflation in 2015.

The number of employed Hungarians is expected to increase by 2.5% in 2015, growing across all sectors of the economy, and is projected to increase by just 1% in 2016. The jobless rate could fall to 7% in 2015 and around 6.7% in 2016. These figures, however, take into account fostered workers who earn less than minimum wage for such jobs as street sweepers or metro ticket takers.

GKI said this yearʼs fiscal deficit target of 2.4% of GDP will probably be achieved but the 2016 deficit target of 2% is unlikely to be met. Hungaryʼs current account and capital surplus will decrease in 2016 to €7 billion from €8 bln due to a decline in EU transfers.

GKI said the National Bank of Hungaryʼs policy rate is expected to remain unchanged until the end of 2016 and the euro/forint exchange rate will be 310 as an average in 2015 and around 320 in 2016.

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