Following the continuous spectacular expansion in investments in the second quarter of 2017, GKI raised its GDP forecast for 2017 from 3.5 per cent to 3.8 per cent, and it expects a similar growth rate for 2018 as well. This is a significant acceleration compared to the 2 per cent rate in 2016, driven by the renewed inflow of EU transfers and the pre-election demand boost. At the same time, although the Hungarian growth rate is far above the EU average, it is only very modest in the CEE region. The close to 4 per cent GDP growth, the around 3.5 per cent consumption and the 20 per cent and 9 per cent growth rates of investments in 2017 and 2018 are very favourable indicators in themselves; however, they are unsustainable in the Hungarian model without EU transfers. The government will soon have to decide on the revision of its European policy, including its accession to the euro area, providing that it does not want to end up on the EU’s periphery, on a disadvantageous economic trajectory leaving to relative decline.
After reaching historic peaks in July, GKI’s economic sentiment index and its business confidence index continued to rise in September. According to the empirical survey conducted by GKI with the support of the EU, almost all sectors have managed to exceed their best expectations at all times. Although consumer expectations deteriorated slightly in September, they still show strong optimism.
The growth rate of the Hungarian economy was noticeably lower in the second quarter of 2017 than in the first one, and it was one of the lowest in the CEE region. However, it still exceeded the EU average. The spectacular expansion of investments continued, and on this basis, GKI raised its GDP forecast for 2017 to 3.8 per cent. The trends are favourable in the short term; however, long-term solutions are still missing.
GKI’s economic sentiment index reached its historic peak in July. It decreased slightly in August, within the statistical margin of error. According to the empirical survey conducted by GKI with the support of the EU, the business confidence index fell slightly in August over the previous month. However, consumer expectations increased a bit.
In July, the GKI real estate indices for Budapest and Hungary stood at 1 and 0 points respectively. Both figures dropped slightly by 1 point, compared to the previous survey. Both indices went up 2 points, compared to the survey made one year earlier. The property market outlook improved only in the office space market, from the previous quarter. On the other hand, no significant change occurred in the other three segments. Generally, the property market outlook is slightly over its peak but it is still on the sunny side.