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Gov’t sees GDP growth staying well over 3% in mid-term

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Hungaryʼs government expects economic growth to stay well above 3% in the mid-term, even after peaking at 4.3% next year, an update of the countryʼs Convergence program released yesterday shows, according to Hungarian news service MTI.

The government projects GDP growth will accelerate from 4.1% this year to 4.3% in 2018. Afterward, it will decelerate to 3.8% in 2019, 3.7% in 2020 and 3.6% in 2021, which is the end of the forecast period in the updated program submitted to Brussels on Tuesday.

The government noted in the report that GDP and consumption have reached pre-crisis levels, but investments and householdsʼ purchases of consumer durables are still below levels in 2008, leaving room for growth. 

The projections in the program update show growth of household consumption expenditures peaking at 6.1% this year before falling to 5.4% in 2018, but remaining higher than 4% over the forecast horizon.

Growth of public consumption expenditures is set to peak at a moderate 1% in 2018, before falling to 0.7% in 2019 and stagnating in the following two years.

The government projects investment growth will peak at 12.9% next year then fall to 7.8% in 2019. It will remain over 6% in the following two years, according to the forecast.

The government puts export growth at more than 6% from 2018 until the forecast horizon. It projects import growth will peak at 8.2% next year, but remain around 7% till 2021.

The general government deficit is seen narrowing from 2.4% of GDP this year and next year to 1.8% in 2019, 1.5% in 2020 and just 1.2% in 2021.

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