OECD lowers GDP forecast for Hungary to 1.6%

EU

The GDP growth forecast for Hungary was lowered by OECD today to 1.6% in volume terms from the previous forecast of 2.4% published in the OECDʼs Economic Outlook in November, Hungarian news agency MTI reported. The OECD maintained its 3.1% projection for Hungaryʼs growth next year.

“Growth is projected to moderate in 2016 due to a temporary contraction in public investment as a new cycle of EU structural funds commences, but should pick up again in 2017. Private demand should remain solid and employment should continue to expand,” the OECD said in the report. 

OECD raised the forecast for private consumption by 3.7% this year and the next, up from the 3.2% rise in the previous report.

Gross fixed capital formation could decrease by 1.8% this year instead of the 3.2% fall predicted earlier and in 2017 it could expand by 6.9%, at a significantly faster rate than the 0.8% growth noted in the November report, MTI said.

According to the report, total domestic demand could rise by 1.8% this year and 3.8% next year, faster than the earlier forecasts of 1.1% for 2016 and 2% for 2017. Exports could grow by 3.7% this year, then by 5.5% next year, while imports could rise by 3.7% and 6.6% respectively, MTI added.

“The disappearance of economic slack and the one-off effects of lower energy prices will push up inflation during 2017,” the report said according to MTI. Inflation is seen at 0.1% in 2016 and 1.7% in 2017, below the previous forecasts of 2.2% for 2016 and 2.7% for 2017, according to the report.

The OECD report also anticipates the unemployment rate to drop to 5.8% as compared to the 6.3% in the earlier report, chiefly driven by the “private sector, although the expanding public work schemes continue to be an important factor behind the fall in unemployment”, the report said.

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