Since reaching its historic peak, the GKI economic sentiment index has been falling for the second month

The GKI economic sentiment index reached its historic peak in July and its lowest point this year in August. It continued to decline in September, and fell close to its level a year ago. According to the empirical survey conducted by GKI with the support of the EU, business expectations also reached their level a year ago, whereas the consumer confidence index rose after its decline in July and August.

You can download the report from here.

You can download the survey data in Excel 2007 format from here.

You can reach the archive of survey summaries here.

Growth faster than expected but slowing down

Although the Hungarian economy grew faster than expected and most EU member states in the second quarter of 2018, its growth rate calculated by the EU methodology has been slowing down for six months. According to market forecasts, GDP growth will exceed 4 per cent in 2018 (GKI upgraded its forecast to 4.2 per cent). It will fall to nearly 3 per cent next year, which would be among the lowest in the CEE region where the decline will be more moderate. The rate of increase in investments financed by EU transfers and in household consumption, boosted by the elections as well, is expected to slow down during the rest of the year. There is growing uncertainty and slowdown in the EU, due to, for example, the Turkish and the Italian situation, the threat of a trade war and the Fed’s interest rate rises.

You can download the forecast from here.

The archive of earlier forecasts is available here.

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GKI economic sentiment index fell to its lowest point this year

After reaching its historic peak in July, the GKI economic sentiment index fell to its lowest point this year. According to the empirical survey conducted by GKI with the support of the EU both business and consumer expectations deteriorated, but they continue to reflect optimism.

You can download the report from here.

You can download the survey data in Excel 2007 format from here.

You can reach the archive of survey summaries here.

Who benefits from the weak forint?

Following the Fed’s raise in interest rates and the normalisation of American monetary policy, the European Central Bank has also embarked on a path of contractionary policy (a strategy that the National Bank of Hungary is yet to pursue). The change in international financial conditions, the possibility of a global trade war, the shock experienced by the Turkish financial system, as well as the uncertainty in the Italian political scene have all led to an outflow of capital from developing countries, including Hungary. After a few years of constant but modest decline in value, the forint depreciated significantly: from April to early July, the EUR/HUF exchange rate decreased by 6 percent, and the USD/HUF exchange rate fell by 10 percent, followed by a slight appreciation of the currency.

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Euphoria on home market: demand and prices both may rise further

The GKI real estate index rose to 4 points in July 2018, while the Budapest index stood at 5 points. The index has increased by nearly 2 points and the Budapest index has gone up by 3 points, compared to the previous survey conducted in April. Both indices have increased by 4 points, compared to one year earlier and reached their historical peaks indicating that real estate market players have never been so optimistic during earlier surveys.

You can download the report from here.

You can download the index values from here.