IMF: Hungarian economy performing well

Budapest (MTI) – The Hungarian economy is performing very well and its vulnerability to shocks has declined substantially, although debt levels and financing needs remain high, IMF staff said in a report based on preliminary findings gathered as part of IMF’s regular consultation with Hungarian authorities.

According to the IMF, solid growth and a sharp reduction in unemployment are largely due to supportive macroeconomic policies, a favourable external environment, and high utilisation of EU funds.

Output growth is projected to moderate slightly this year owing to the expected deceleration in the uptake of EU funds. Headline inflation is expected to remain low on account of low import prices and slowly reach the 3 percent target as food and energy prices recover and the labour market tightens, the report said.

The current account has been in record surplus while external debt — especially FX-denominated — and gross public debt have continued their downward path.

The IMF said Hungary is now less vulnerable to external shocks, though it gave warning that financing needs remain high and an abrupt sharp deterioration in global or emerging market risk perception could lead to capital outflows.