Hungarian government projects GDP growth over 3% through 2020


Photo by Feng Yu /

The Hungarian government anticipates GDP growth to remain over 3% in the period of 2018-2020, an update of the countryʼs Convergence Program sent to Brussels yesterday shows, according to Hungarian news agency MTI.

The updated program, which Hungary must submit to the European Commission (EC) each spring, projects GDP growth of 3.4% for 2018, 3.1% for 2019 and 3.2% for 2020. 

Investment growth is seen accelerating to 9.6% in 2018 from 9.1% in 2017, before slowing to 5.5% in 2019 and 4.0% in 2020. 

Expenditures on household consumption are set to climb by 3.7% in 2017, then slow to 2.8% in 2018 and 2.7% in both 2019 and 2020. 

Export growth is seen picking up from 6.3% in 2017 to 6.8% in 2018, 7.0% in 2019 and 7.3% in 2020. 

Import growth is expected to accelerate to 7.6% in 2018 from 7.4% in 2017, before slowing to 7.0% and 7.1% in 2019 and 2020, respectively. 

The government projects the trade balance will have a 0.4-percentage-point negative impact on the GDP growth rate in 2017 and a 0.1-percentage point negative impact in 2018. The trade balanceʼs impact is seen turning positive again from 2019, contributing 0.7 percentage point and 0.9 percentage point to GDP growth in 2019 and 2020, respectively. 

The projections in the programme show CPI rising from 0.9% in 2017 to 2.4% in 2018, then levelling out at 3.0%, the National Bank of Hungaryʼs mid-term "price stability" target, in 2019-2020. 

The output gap is expected to narrow from 0.6% of GDP in 2017 to just 0.1% in 2018-2019, before the economy reaches full capacity in 2020. 

The government projects this yearʼs general government deficit will reach 1.9% of GDP, coming in under the 2.0% target in the budget act. The deficit is set to narrow from a targeted 2.4% in 2017 to 1.8% in 2018, 1.5% in 2019 and 1.2% in 2020. 

The primary balance, which excludes the cost of servicing debt, is projected to remain steady with a surplus of around 1.0% of GDP in 2018-2020 after dipping to 0.6% in 2017. 

The program noted that Hungaryʼs structural deficit, which excludes cyclical and one-off effects, had been well under its 1.7%-of-GDP Medium-Term Objective since 2012, but it would rise temporarily over the MTO in 2016 and 2017, before returning to the target in the mid-term and falling under the objective in 2020. 

State debt as a percentage of GDP is set to fall to 73.6% in 2017, 72.4% in 2018, 68.4% in 2019 and 64.6% in 2020. 

The updated programme puts the unemployment rate among Hungarians aged 15-74 at 5.1% in 2018-2020, down from 5.2% in 2017. 

In an upside risk scenario, assuming strengthening confidence, the National Economy Ministry estimated 0.07-0.27 percentage point could be added to GDP growth in 2017-2020, mostly on the back of a bigger contribution by investments. In a downside risk scenario, envisioning a deterioration in external demand, it estimated the negative impact on GDP to be 0.26-0.31 percentage point, mainly because of the effect on exports and imports. 

OTP Redeems EUR 400 mln of Green Securities Banking

OTP Redeems EUR 400 mln of Green Securities

KDNP Pulls out of EPP After Tisza Joins Elections

KDNP Pulls out of EPP After Tisza Joins

Gloster Wins EUR 15 mln BMW Contract Deals

Gloster Wins EUR 15 mln BMW Contract

Int'l Travelers to Europe Prioritize Safety, Quality This Su... Tourism

Int'l Travelers to Europe Prioritize Safety, Quality This Su...


Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.