The Hungarian government raised its own GDP growth forecast this year to 3.1% from the previous year’s 2.5% in an update of the countryʼs Convergence Program submitted to Brussels last Thursday. According to the EC, the updated program was not submitted by the cut-off date for the forecast.
Domestic demand is expected to remain the main driver of economic growth, but with a shift from investment to private consumption, according to the ECʼs fresh forecast. New mortgage rules are expected to raise householdsʼ real disposable income as banks will have to reimburse revenue considered to have been unfairly collected. The unemployment rate is expected to decline to 6.8% in 2015 and 6% in 2016. In the second half of 2015 inflation is expected to rise above last year’s 0%, and up to 2.5% in 2016.
The 2015 deficit is forecast at 2.5% of GDP, while expenditure increases incorporated in the April budget amendment are expected to be offset by the improved revenue outlook since the winter forecast due to the more favorable base effects and higher consumption growth.
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