Raiffeisen lowers 2016 inflation forecast to 0.5%

Analysis

Inflation in Hungary could reach 0.5% in 2016, Zoltán Török, senior analyst at Raiffeisen Bank said yesterday, according to Hungarian news agency MTI.

The current forecast is lower than the 1.5% figure given by Raiffeisen in January. 

The bank predicts that Hungaryʼs GDP growth this year could be around 2-2.2%, which is also lower than the 2-2.5% forecast given previously.

Török said slower growth can be attributed without a doubt to the lower amount of development funding from the European Union.

With wage hikes, personal consumption could increase this year and play a key part in economic growth, but companies might be forced to make more investments in human capital as many are finding that higher wages in and of themselves are not enough to attract the workers they need.

Raiffeisen is predicting that the National Bank of Hungary will lower its base rate further in the coming months to around 1.0-0.9% depending on the decisions of the Monetary Council.

Inflation could rise to around 2-2.2% in 2017 and GDP growth could increase to 2.9%, Török said.

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