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EBRD raises Hungary 2021 GDP growth forecast

Analysis

The European Bank for Reconstruction and Development (EBRD) raised its forecast for Hungary's GDP growth this year to 7.7% in a biannual report published on Thursday, according to a report by state news wire MTI.

The forecast was raised from 5.5% in the previous Regional Economic Prospects report, published in June.

Hungary's government anticipates growth of around 7% for 2021. First-half GDP growth reached 7.6%.

The EBRD sees Hungary's GDP growth slowing to 4.8% in 2022.

The bank said a minimum wage rise of close to 20% and a personal income tax rebate, both scheduled for 2022, are expected to boost household consumption.

Higher energy prices and the semiconductor shortage are negatively impacting the manufacturing sector, especially the automotive segment, which is expected to weigh on Hungary's exports in the short term, it added.

Investments co-financed with European Union funding are likely to boost the post-crisis recovery, the EBRD said, noting that the government recently issued the equivalent of EUR 4.5 billion of FX bonds to pre-finance projects while the country waits for its Recovery and Resilience Facility (RRF) plan to be approved.

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