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IMF sees Hungary economy stagnating this year, advises policy turn

The International Monetary Fund now sees Hungary's economy stagnating this year, as opposed to a growth of 0.8% forecast in the latest World Economic Outlook of the international lender, published last October. The IMF revised its forecast in the report on its annual Article IV Consultation and Third Post Program Monitoring Discussions, published in Washington on Friday. The consultations were concluded on January 26 in Budapest, and the report was completed on March 5. The IMF now expects consumer prices to climb 3.2% in annual average this year (last fall it projected 3.5%) after 5.7% last year, the current account surplus to work out at 2.1% of GDP (the earlier forecast was 2.7%) after 1.7% last year, and unemployment averaging at 11.1% (instead of the earlier projection of 10.5%) after 11.0% last year. Other projections of the IMF see general government deficit at 3.2% of GDP this year and 3.4% next year after 2.5% last year, gross public debt to grow to 79.9% of GDP this year and 80.3% next year from 79.0% last year -- easing back to 79.2% of GDP only by 2018 in the baseline scenario --, lending to the private sector falling 3.0% this year and growing 3.0% next year after dropping 7.4% last year, gross domestic investment falling to 16.5% of GDP this year and to 16.3% next year from 17.1% last year, household consumption is expected to fall 0.9% this year and rise 0.5% next year after dropping 2.9% last year.