BUDAPEST: The International Monetary Fund increased its projection for economic growth in Hungary for this year and the next and also raised its forecasts for annual average inflation for both years in its fresh World Economic Outlook published on Tuesday.
The fund raised its forecast for 2017 global economic growth marginally, to 3.5 percent after 3.1 percent growth last year. The forecast for 2018 is 3.6 percent. The IMF now expects 2017 GDP growth in Hungary to pick up from 2 percent last year to 2.9 percent rather than to 2.5 percent as in the previous outlook released in October 2016. It raised its forecast for the 2018 growth rate to 3.0 percent from 2.1 percent. The report contains the main forecasts for Hungary without a comment.
The projection is still well under the government’s respective official forecasts. In an update last December, the Hungarian economy ministry raised its forecast for 2017 GDP growth to 4.1 percent from 3.1 percent and projected a further slight acceleration in the growth rate, to 4.3 percent in 2018, citing the expected boost to employment, growth and consumption, stemming from a six-year wage agreement signed one month earlier. The IMF now forecasts Hungarian consumer prices to rise on average by 2.5 percent this year and by 3.3 percent next year, significantly quicker than the respective 0.8 percent and 2.6 percent rates projected in the October report.
The IMF’s fresh projections exceed the economy ministry’s projections for 1.6 percent average annual inflation in Hungary in 2017 and 3.1 percent in 2018. The IMF now sees Hungary’s current account surplus narrowing to 3.7 percent of GDP in 2017 rather than to 4.6 percent and projects less squeeze next year: to 3.0 percent instead of 1.4 percent of GDP. Part of the changes could stem from a lower than forecast current account surplus, of 4.3 percent of GDP, in 2016.
The IMF now projects Hungary’s unemployment rate to fall to 4.4 percent this year after a larger than foreseen fall, to 4.9 percent last year. Last October it yet expected the ratio to drop to 6.0 percent in 2016 and to 5.8 percent in 2017. The monetary fund now projects that the unemployment rate will drop to 4.3 percent in 2018.
