MNB puts Hungary sustainable growth rate around 2.5%

MNB

Hungary's economy could grow at a sustained annual rate of 2.5%, representing a potential convergence rate of about 1%, the National Bank of Hungary (MNB) said in a report published today.

The central bank formulated the estimate based on the current rate of investment, which, it noted is around the average in the region.

Achieving growth potential of 3.5-4% would require a higher rate of investment, of around 25%, the MNB said in its fresh Growth Report.

According to the report, only a permanent change in domestic economic agents’ behaviour may enable the Hungarian economy to break out of the duality of growth and imbalance that characterized Hungary for decades, the MNB said. It added that the financing required to boost the investment rate is expected mainly from stronger corporate productivity, further reductions in the general government borrowing requirement and reliance on the stable external financing of EU funds and foreign working capital.

The MNB noted the continued impact of the global environment on Hungary's growth outlook, citing moderate global growth and higher debt levels post-crisis.

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