OECD lowers Hungary forecast for 2016 GDP growth

Budapest, June 1 (MTI) – The OECD has lowered its growth forecast for Hungary’s economy to 1.6 percent from 2.4 percent in the previous Economic Outlook released in November 2015.

In the report published on Wednesday, the OECD maintained its 3.1 percent projection for Hungarian GDP growth next year.

The organisation said “growth is projected to moderate in 2016 due to a temporary contraction in public investment as a new cycle of EU structural funds commences, but should pick up again in 2017. Private demand should remain solid and employment should continue to expand”.

The OECD expects private consumption to rise by 3.7 percent this year and next, up from the 3.2 percent projection for both years in its previous report.

Total domestic demand is expected to rise by 1.8 percent this year, then by 3.8 percent in 2017, faster than the earlier respective forecasts of 1.1 percent and 2 percent.

Exports are forecast to grow by 3.7 percent this year before picking up to 5.5 percent next year, while imports are likely to rise by 3.7 percent and 6.6 percent respectively.

The public-debt-to-GDP is expected to stand at 74.3 percent this year, then at 73.3 percent in 2017, as against the earlier respective forecasts of 74.6 percent and 72 percent.

The OECD said “the disappearance of economic slack and the one-off effects of lower energy prices will push up inflation during 2017.” Inflation is seen at 0.1 percent in 2016 and 1.7 percent in 2017, below the previous forecasts of 2.2 percent and 2.7 percent respectively.

Unemployment is forecast to fall to 5.8 percent this year as opposed to the earlier forecast of 6.3 percent. The jobless rate may further ease to 5.3 percent in 2017, lower than the 5.9 percent projected in November. “Employment growth is being mainly driven by the private sector, although the expanding public work schemes continue to be an important factor behind the fall in unemployment”, the report said.