TakarékBank sees 3.2% GDP growth this year

MNB

TakarékBank, the central bank of saving cooperatives in Hungary has seen 3.2% GDP growth in Hungary this year, partly due to the accelerating output growth in the eurozone, particularly in Germany.

The engine of growth in Hungary will be household consumption while inflation should remain in the negative for most of the year, TakarékBank analysts said at a press conference in Budapest on Wednesday.

They expect the National Bank of Hungary (MNB) to cut its policy rate to 1.5% by summer’s end from the present record low of 2.1%.

The government’s official projection is still 2.5% GDP growth for 2015, down from the Central Statistical Office (KSH) projection of 3.6% made last year, but government officials have already signaled the need for an upgrade in this yearʼs forecast.

Unemployment should sink to 7.4% on average this year from the official average reading of 7.7% from last year, the analysts added.

TakarékBank expects general government ESA deficit to fall to 2% of GDP this year from the 2.6% estimated by the European Commission last year, and falling further next year. As the Hungarian currency is expected to strengthen by the end of the year, public debt should diminish, as well, to reach a figure below 73% of GDP by end-2016, the bankʼs analysts said. It was 76.9% of GDP at the end of last year, down slightly from 77.3% a year earlier, according to MNB statistics.

Hungaryʼs external financing capacity – the combined surplus of the current and capital accounts – could rise to 8.7% at year-end from 8% recorded at the end of last year, partly due to cheaper energy imports, the analysts added.

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