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Varga puts GDP growth at 1.9% for 2014

Economy minister Mihály Varga forecast Hungary's GDP growth in 2014 at 1.9% in an written answer to an MP's question published on the website of Parliament yesterday. The projection is a tad lower than the one made by Varga himself in a radio interview on Monday or by the Prime Minister and his spokesman earlier.

Varga said that the macro-economic prognosis with the latest data would be finalized by the end of September. The projection will be supplemented to the budget bill, to be submitted to parliament by September 30.

Growth for 2013, projected at 0.7% in the country's convergence plan, has been supported by rising household spending, boosted by rising employment and the government measures raising the disposable income of the population, the economy minister said. Newly created vehicle industry capacities help expanding net exports, he said.

“Consumption could rise at an accelerated pace in 2014 and investments could also start to rise, supported by the low base rate, the MNB's 'Funding For Growth' scheme and by the more intense utilization of EU funds,” Varga stated in making the 1.9% growth estimate for 2014.

Growth is expected to reach 2.3% in 2015 and 2.5% in 2016, in line with the projections in the convergence plan, he said, and it could continue along these lines or about 1-2 percentage points over that of the EU averaged between 2017 and 2022. Steadily low inflation could be a factor in securing steady growth, according to Varga.

Inflation is expected to be under the convergence estimate of 3.1% for 2013 and 3.2% for 2014. The government has revised its 2014 inflation projection down to 2.8% when informing ministries of the conditions they should calculate when preparing information to the budget act. Over 2015, the government expects inflation to be in line with the central bank's 3% midterm target.