MNB raises 2017 GDP growth forecast to 3.6%

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Although the National Bank of Hungary (MNB) has upped its GDP growth forecast for next year to 3.6% from the 3% predicted three months earlier, less optimistic than the Ministry for National Economy or MNB Governor György Matolcsy, its prediction is still more bullish than the apparent market consensus of around 2.8%.

The bank also released a forecast for 2018 for the first time, projecting 3.7% GDP growth for 2018.

Hungary’s GDP growth expectations for 2017 have been greatly discussed lately, with predictions for the figure ranging widely. Yesterday the Ministry for National Economy put its forecast at a stunning 4.1%, coming shortly after 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 less bullish about Hungary’s economic growth projected for next year. According to a weekly flash sent to the BBJ on Friday, CIB Bank Hungary puts its year-on-year GDP growth forecast at 2.7%, slightly below the market consensus of 2.8%. CIB Senior Analyst Sándor Jobbágy confirmed the figure to the Budapest Business Journal yesterday, shortly after the ministry’s announcement.

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. 

As far as inflation is concerned, the MNB raised its 2017 inflation forecast slightly, now projecting annual average inflation at 2.4%, up from the 2.3% rate projected in September, according to Hungarian news agency MTI. The central bank also released a forecast for 2018 for the first time, projecting 3% average inflation.

The fan chart published yesterday indicates that the MNB expects CPI to rise and exceed 2% early next year and to reach the MNBʼs 3% mid-term target in early 2018, rather than in the middle of 2018 as predicted in September, MTI added. The central bank interprets the target within a +/-1% tolerance band.

The MNB’s inflation forecast is the same as the ministryʼs for 2016, but higher for 2017, when the ministry projects annual average inflation of 1.6% in its fresh forecast published earlier yesterday, MTI added.

The MNB is scheduled to publish the report in full tomorrow.

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