The European Bank for Reconstruction and Development (EBRD) has raised its forecast for Hungaryʼs GDP growth this year to 4.6% in a biannual report published on Wednesday. The forecast was raised from 3.7% in a release in May.
The EBRD sees Hungaryʼs economic growth slowing to 3.1% in 2020, albeit a 0.2 percentage-point improvement over the forecast in the May economic outlook, state news agency MTI reported.
The EBRD said investments and household consumption have been key drivers of recent strong economic growth in Hungary. It acknowledged a "strong start" for growth in 2019, and said full-year growth is expected to "remain very solid... notwithstanding concerns about the car industry in Germany, to which Hungary is vulnerable."
A projected slowdown in growth in 2020 will be partially offset by domestic demand, supported by a double-digit recovery in corporate credit and continued wage growth resulting from the tightening labor market, the EBRD said.
"Trade disputes and the economic performance of Hungaryʼs main trading partners, such as Germany, are negative risks to that scenario," it added.
Separately, the International Monetary Fund (IMF) reiterated its earlier forecasts of 4.6% Hungarian GDP growth for 2019 and 3.3% growth in 2020, while predicting GDP could grow by 2.9% in 2021.
In its November 2019 Regional Economic Outlook report for Europe, the organization also reiterated its inflation predictions of 3.4% for this year and the next, dropping slightly to 3.3% in 2021.
The Hungarian governmentʼs official projection for GDP growth this year is 4.0%, based on the spring update of Hungaryʼs Convergence Program, but Minister of Finance Mihály Varga indicated earlier that higher-than-expected first-half growth of 5.1% could lift full-year growth to 4.3-4.4%.