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JP Morgan upgrades Hungary growth forecast

MNB

JP Morgan said on Friday it had significantly upgraded its forecast for Hungary’s GDP growth on the back of a robust auto sector and the simultaneous fiscal and monetary easing.

London-based emerging markets economists of the global financial services group said in a research note released to clients in London that their updated tracking exercise points to a 3rd-quarter GDP growth of 2.7% on a quarter-on-quarter seasonally adjusted annualized rate basis — “considerably stronger than our initial forecast of 1.5%.”

“Our full-year 2013 GDP growth forecast now stands at 0.6% from 0.5% previously while our 2014 GDP forecast has moved up to 2% from 1.8%.”

Aside from the auto sector’s robust performance, domestic policy stimulus is being delivered through multiple channels. After significant tightening last year, “we estimate a fiscal impulse of 1% of GDP in 2013 and a further 0.5% in 2014.”

On the monetary policy front, credit conditions have eased significantly both through policy rate cuts and the MNB’s Funding for Growth Scheme: “We estimate [the scheme] will add 1% to GDP growth by the end of next year,” the analysts said.

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