Foundations of sustainable economic growth should be established now

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.

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GKI’s economic sentiment index near its peak again

In November, GKI’s economic sentiment index was again near to its historic peak reached in September. According to the empirical survey conducted by GKI with the support of the EU, in November expectations improved slightly in the business sector compared to October, whereas they declined among consumers within the statistical margin of error.

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Stable property market outlook with a price bubble about to burst

The GKI real estate indices for Budapest and Hungary stood at -1 and 0 points in October 2017, respectively. Compared to the previous quarter, the index in the capital has dropped by 2 points but the index for the whole country has not changed. The Budapest index has decreased by 4 points over a year and the country index has increased by 2 points. The peak of the property market outlook is over for about a year but the present outlook is still positive.

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Trends are favourable in the short term

Trends in the Hungarian economy of the first half of the year have continued in the past few months, and no substantial changes can be expected until mid-2018. Owing to the surge of EU transfers and their budgetary advance payments as well as the pre-election demand boost, the economic growth rate reached 3.8 per cent, which is above the EU average but it is among the lowest in the CEE region. Although GDP growth is driven by investments, consumption is also rising fast. Although external and internal equilibria deteriorate slightly, and inflation accelerates, this is not a problem for the time being. The trends are favourable in the short term; however, long-term solutions are still missing.

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Compared to its peak, GKI’s economic sentiment index fell in October

Compared to its historic peak in September, GKI’s economic sentiment index fell slightly in October. According to the empirical survey conducted by GKI with the support of the EU, this was the result of some deterioration in business expectations as consumer expectations improved slightly, within the statistical margin of error.

You can download the report from here.