Due to better-than-expected Q4 data last year and relatively favourable economic expectations at the beginning of this year—despite the third wave of the pandemic and mixed data—GKI raised its growth forecast for 2021 by 0.6 percentage points to 4.3 per cent (4-4.5 per cent) compared to the end of last year. This brings Hungarian GDP close to, but not yet at, its 2019 level. The main negative risk of the projection is that the substantive restrictions caused by the pandemic will persist for a while in the second half of the year (either in Hungary or in its main trading partners). However, the approaching elections in 2022 may have a stimulating effect by encouraging the government to further loosen fiscal policy. According to GKI, employment and unemployment will remain broadly unchanged on an annual average but will improve over the course of the year. Real earnings will increase by 2 per cent, consumption by 3.5 per cent and investments by 6 per cent. Although the general government deficit is decreasing, it will be unreasonably high: after last year’s 8.1 per cent it could be around 6.5 per cent this year. Inflation is accelerating, it will be around 3.9 per cent after 3.3 per cent in 2020, and the forint will weaken further on an annual average, thus one euro will be worth at least HUF365 this year after HUF351 last year, and it cannot be ruled out that the National Bank of Hungary will be forced to tighten up. The external financing capacity will be in a stable surplus, due to the expected inflow of EU transfers. Although the international isolation of the Hungarian government is increasing, no change in policy is expected this year.
After a modest decline in February, GKI’s economic sentiment index rose to a lesser ex-tent in March. However, it approached its otherwise fairly low top level since the start of the pandemic measured in January. According to a survey conducted by GKI Economic Research Co. with the support of the EU, expectations of all sectors examined and con-sumers, with the exception of services, improved slightly. At the same time, the econom-ic sentiment index did not offset even 60 per cent of its fall in April last year by March this year.
Although GKI’s economic sentiment index declined slightly in February, both business and consumer expectations remained more favourable than at the end of last year. Ac-cording to a survey conducted by GKI Economic Research Co. with the support of the EU, the economic sentiment index offset just over half of its fall in April last year by February this year. More specifically, the business confidence index offset about 60 per cent of its fall, and the consumer one 40 per cent.
GKI’s economic sentiment index rose markedly in January. Although it reached its highest level since the start of the pandemic, it offset only just over half of its April fall. According to a sur-vey conducted by GKI Economic Research Co. with the support of the EU, both business and consumer expectations improved in the first month of the year.
One of the many consequences of financialization in the past decades has been the significant appreciation
of the importance of financial markets’ liquidity. In order to maintain financial stability, one must have a
clear understanding of the sources of market liquidity (ML).