GKI: GDP growth expected at 2%

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Hungarian economic research institute GKI today said it expects GDP growth for Hungary in 2015 to be around 2%, in line with the institute’s earlier projection in December when it raised the figure from 3% to 3.2% for 2014. GKI believes that the slowdown will continue in 2016.

The slowdown for this year is chiefly due to the uncertain economic recovery in Europe and the waning base effect of car industry investments in Hungary, according to GKI. The institute said that exports are expected to slow this year, while imports could slow even further, due to weaker domestic demand and low energy prices.

As a result, trade surplus will reach €8 bln after last year's €6.7 bln. The current and capital account surplus, however, is expected to diminish particularly given the €2 bln decrease in EU development funding from last year, GKI said.

GKI expects real wages to rise 1.8% this year after rising around 3% last year, while real household income should grow 1.5% after a growth of 3% last year. Household consumption is expected to increase by 2% this year after a 1.5% growth last year, bringing it to an eight-year high.

Although GKI sees annual average inflation as rising to 0.5% this year from minus 0.2% last year, deflation should continue for some time. The research company expects the euro to average at HUF 315 this year after settling at 308.7 in 2014.

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