Similarly to 2017, the Hungarian economy is expected to grow at a rate close to 4 per cent in 2018. Although this rate is well above the EU average of slightly less than 2.5 per cent, it is moderate in the CEE region. The 20 per cent increase in investments in 2017 will slow down to about half of it this year, whereas the rise of consumption over 4 per cent will essentially remain in 2018 as well. However, the rate of the expansion of exports will be closer to that of imports. Incoming EU transfers will rise. Inflation will accelerate somewhat.
Compared to its historical peak at the end of 2017, GKI’s economic sentiment index advanced in January within the statistical margin of error. According to the empirical survey conducted by GKI with the support of the EU, this was the result of a minimal progress in business expectations and a slight deterioration of consumer expectations. Companies consider labour shortage as the main obstacle to expansion.
GKI’ economic sentiment index reached its new historic peak in December. According to the empirical survey conducted by GKI with the support of the EU, business expectations have never been more favourable than now, and consumer expectations were more favourable only once, during the few months of the Medgyessy government’s 100-day programme in 2002.
The Hungarian economy is proceeding on a path indicated in the September 2017 forecast of GKI. Economic growth accelerates due to the surge in EU transfers as well as the increase in consumption driven by steadily rising wages due to the forthcoming elections and a shortage of labour. After 2.2 per cent in 2016, GDP will grow by 3.8 per cent both in 2017 and 2018. Although this rate is well above the EU average, it is one of the lowest in the CEE region, and no major changes can be expected in 2018 in this regard.
Trends in the Hungarian economy of the first half of the year have continued in the past few months. Although the 3.8 per cent GDP growth in the third quarter of 2017 once again exceeded the EU average of 2.5 per cent, it is among the low ones in the CEE region. GKI maintains its GDP growth forecast of 3.8 per cent for 2017 and 2018. More and more international institutions call the attention of the Hungarian government to establish the foundations of sustainable economic growth during these relatively favourable years.