The European Commission (EC) confirmed its projection for Hungaryʼs GDP growth this year at 3.4% in a quarterly forecast released Thursday. The projection was unchanged from the 3.4% forecast published in November, and is still well under the governmentʼs forecast of 3.9%.
The EC puts 2020 growth at 2.6%, noted state news wire MTI.
In a country note, the EC acknowledged that Hungaryʼs GDP growth had accelerated to almost 5% in 2018, but said the domestic cycle "has reached its peak."
Investment growth is forecast "to stabilize at a high level" relative to GDP in the coming years as the absorption of EU funds peaks and a temporary VAT reduction on home construction expires.
The EC sees consumption growth "moderating" as the economy absorbs its labor reserves and employment and income growth slow.
The EC added that strong demand and labor cost growth is fueling core inflation, but subdued oil prices are expected to keep headline inflation near 3% in 2019 and 2020.