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IMF raises Hungary 2015 growth forecast

Analysis

The International Monetary Fund raised its projection for economic growth in Hungary this year to 2.7% in its fresh World Economic Outlook published yesterday from the 2.3% forecast of last October. Economic growth remained strong in Hungary, but is expected to decline this year on account of lower investment growth and less supportive fiscal conditions, the IMF said. 

Private consumptions was the key growth driver amid improving labor market conditions, it added. The IMF forecasts consumer prices will remain unchanged in 2015. In October it expected prices to rise by 2.3% this year.

With output still below potential and persistent disinflationary pressures, Hungary has scope for further cautious monetary policy easing, the IMF said. Elevated public debt and high fiscal deficits however highlight the need for fiscal consolidation, including via spending restraint, it added.

For 2015, the IMF puts Hungaryʼs current-account surplus at 4.8% and the unemployment rate at 7.6%. In the previous World Economic Outlook issue, the 2015 c/a surplus was projected at 2.0% and the unemployment rate at 7.8%.

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