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Ecomin bullish in raising 2017 GDP growth forecast to 4.1%

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Hungary’s Ministry for National Economy expects the country’s GDP growth to accelerate, exceeding 4% in 2017, according to Hungarian news agency MTI. Others, however, seem less bullish. CIB Bank Hungary, for example, will keep its forecast at 2.7%, according to a commentary sent to the Budapest Business Journal.

The Ministry for National Economy puts its GDP forecast at 4.1%, as it expects the six-year wage agreement signed in November and the general government deficit ratio staying below 3% – and returning to a falling trend from 2017 – to boost growth, according to MTI.

The ministry has significantly raised its forecast for 2017 GDP growth from 3.1% and projects a further slight acceleration in the growth rate in 2018, to 4.3%. GDP growth would gradually slow to 3.8% in 2019 and to 3.7% in 2020, the ministry foresees, as reported by MTI.

The ministry now projects household consumption will rise by 5.8% in 2017, up from 4.4% this year, MTI reported, adding that the ministry sees gross fixed capital accumulation – investments – to rise 10.8% next year after a 10.2% drop this year, mainly reflecting the EU funding cycle. Investments will rise even more, by 12.5% in 2018 before the increase slows to 6.8% in 2020, according to MTI.

The ministry’s announcement comes shortly after National Bank of Hungary Governor György Matolcsy said on December 12 that GDP growth in Hungary could reach 3.5-4% in 2017, above even the governmentʼs own forecast.

However, non-government affiliated players seem to be more dovish about GDP growth. 

According to a weekly flash sent to the BBJ on Friday, CIB Bank Hungary puts the year-on-year GDP growth forecast at 2.7%, slightly below the market consensus of 2.8%. In answer to a question today from the BBJ, CIB Senior Analyst Sándor Jobbágy said the bank still expects the GDP growth this year to come in at 2.7%. It does expect growth to accelerate next year, primarily on the expansion of internal demand and a stronger supporting effect from European Union funds, the CIB commentary says. Yet, it believes the acceleration of investments will be moderate, and therefore is keeping its forecast at 2.7%.

On December 15, economic researcher Kopint-Tárki revised its projection for next yearʼs GDP growth upwards from 2.7% to 3.2%, which was slightly above the government’s then 3.1% forecast. At the same time, Kopint-Tárki said it projected 2.2% economic growth for this year, well under the 2.5% government projection. 

Hungary’s GDP rose by an unadjusted 2% in the first three-quarters of 2016, according to the economy ministry.

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