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MNB expects faster economic growth in 2018

The National Bank of Hungary (MNB) said yesterday in a preliminary release of the main forecasts from its quarterly "Inflation Report," due tomorrow, that economic growth could reach 4.7% in 2018, higher than the 4.4% growth it forecast earlier.

The MNB is projecting 2.8% inflation for this year, unchanged from the September edition of its Inflation Report, according to a summary by state news agency MTI.

The central bank is sticking to its forecast for next yearʼs economic growth, projecting a rate of 3.5%, but has lowered its expected inflation rate by 0.2 of a percentage point to 2.9%.

For 2020, the central bank expects 3% inflation and 3% GDP growth, both in line with its previous forecast.

In a first set of projections, the MNB also said that inflation and GDP could both grow by 3% in 2021.

Revisions of older data meanwhile raise the GDP growth figure for 2017 by 0.1 of a percentage point to 4.1%.

A fan chart published on Tuesday indicates that the central bank expects CPI to be above the 3% mid-term target in early 2019, but to fall below the target after Q1 as inflation trends continue to be volatile. CPI is again seen nearing the 3% target by early 2020. The MNB puts the inflation target in a +/-1% tolerance band.  

The official government forecasts for GDP growth are 4.3% for 2018 and 4.1% for 2019, MTI noted.