Gov't sees 2022 GDP growth picking up to 5.2%

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Hungary's government expects GDP growth to accelerate to 5.2% next year from a projected 4.3% in 2021, the country's annual Convergence Program update sent to Brussels shows.

Economic growth in 2022 is set to climb on a 5.8% increase in household consumption expenditures and a 7.2 rise in gross fixed capital formation. Exports of goods and services are expected to increase 10.5%, outpacing projected import growth of 10%.

The government sees the unemployment rate for Hungarians between the ages of 15 and 74 declining from 4.2% in 2021 to 3.3% in 2022.

The update confirms the government expects next year's general government deficit to reach 5.9% of GDP - revealed days earlier when the Fiscal Council took issue with the deficit target in the 2022 budget draft - before narrowing to 3.9% in 2023, 3% in 2024 and 2% in 2025.

The primary deficit, which excludes the cost of debt servicing, is set to narrow to 3.5% of GDP in 2022, 1.5% in 2023 and 0.8% in 2024, before the balance returns to a modest 0.1%-of-GDP surplus in 2025.

State debt relative to GDP is set to return to a downward path - as required in Hungary's Constitution - from 2021 and reach 73.1% by 2025, still well over the 65.5% ratio at the end of 2019, before the pandemic.

The program projects a HUF/EUR exchange rate of 360.9 for 2022-2025.

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