The European Commission (EC) has raised its projection for Hungaryʼs GDP growth this year to 4.4% in a quarterly forecast released on Tuesday, up from 3.7% in its previous forecast, and over the Hungarian governmentʼs projection of 4.0% growth.
In the first quarter of 2019, GDP growth climbed 5.3% year-on-year, state news agency MTI recalls in its summary report.
The EC says growth was boosted by automotive industry exports and the impact of the mild winter on the construction sector. Second-quarter growth "remained robust," but new orders have not kept pace with construction activity, foreshadowing a "marked slowdown" in investment activity and GDP growth over the coming quarters, it adds.
The EC has left its forecast for next yearʼs GDP growth unchanged at 2.8%. It projects a deceleration in investment growth in 2020, as well as moderating private consumption growth as job creation slows.
Export growth is forecast to slow because of weakness on Hungaryʼs main export markets, the EC says. At the same time, strong domestic demand will continue to boost imports, causing the trade balance to deteriorate, it adds.
The EC sees average annual inflation climbing to 3.2% in both 2019 and 2020. Headline inflation is set to decrease in the second half of 2019, but core inflation should remain close to 4% as strong demand allows rapid wage growth to feed into consumer prices, it notes.
The EC publishes economic forecasts for member states four times a year. The forecasts published in summer and winter only cover GDP and inflation. The ECʼs next economic forecast will be published in November.