In the first two months of 2019, the growth rates of the most important sectors of the Hungarian economy accelerated compared to last year. However, domestic economic expectations reached their two-year low in April. The EU’s economic sentiment index fell to its level measured three years ago, whereas the German business confidence index dropped to its level registered two and a half years ago. Various international growth forecasts suggest that the EU is slowing down in 2019.
Hungary’s GDP expanded by 5.1 per cent in the second half of 2018 year-on-year and by 4.9 per cent in 2018. This high growth rate has been unprecedented for 15 years. Due to the higher than formerly expected GDP growth rate and the stimulation measures of the government such as the family protection action plan, GKI raised its forecast for 2019 to 3.5 per cent in spite of deteriorating global projections. GDP growth has been driven by domestic demand for three consecutive years whereas the contribution of EU transfers to the acceleration of economic growth has moderated significantly. Inflation is picking up, and the pro-cyclical nature of Hungary’s economic policy is easing rather than disappearing. The corrections of economic policy do not touch the substance of the Hungarian model.