In December, GKI’s economic sentiment index was slightly lower than in October, which had been the lowest level until then this year, thus falling to its three-year nadir. According to the empirical survey conducted by GKI (www.gki.hu) with the support of the EU, this was the re-sult of marked deterioration in business expectations as consumer expectations improved slightly. The trend was clearly deteriorating in business expectations in 2019, whereas that of consumer expectations was typically stagnant, with some monthly fluctuations.
The growth rate of Hungary’s GDP accelerated to around 5 per cent in 2018 and 2019, one of the fastest in the EU. Thus, the Hungarian growth rate exceeded all prognoses, including those of the EU and GKI.
The rapid growth can be attributed to the surge in EU transfers and the previously favourable global economic boom and later the improvement in industrial output and outstanding services exports as well as the measures stimulating domestic demand, including wage agreements and tax cuts. GKI underestimated the investment and export potential of the business sector.
After two months of decline, the GKI economic sentiment index increased significantly in November; however, it did not reach its August level or especially its level at the begin-ning of the year. According to the empirical survey conducted by GKI (www.gki.hu) with the support of the EU, business expectations improved markedly in November, and con-sumer ones only minimally.
The Hungarian economy increased outstandingly in the first half of 2019, by 5.1 per cent, the same rate as last year. Until now, this rate has been the fastest in the EU this year, about three times the average. Although the third quarter started well in July, industry and construction slowed down markedly in August. In addition, business expectations suggest no improvement in the coming months. However, the rate of inflation has also decreased since May, by a total of almost 1 percentage point until September. The state of public finances is also favourable, though after 2018 the current account is again in deficit this year, and the forint is weak. The deterioration in global economic conditions and the weakening of the stimulating effects of EU transfers anticipate a marked deceleration of GDP growth in 2020.
GKI’s economic sentiment index decreased within the statistical margin of error and reached its almost three-year low. According to the empirical survey conducted by GKI (www.gki.hu) with the support of the EU, business expectations rose slightly compared to their three-year low, whereas consumer expectations deteriorated a lot after two months of improvement.