Hungarian government revises 2019 growth target and projects at least 4% annual GDP growth until 2023

Hungarian government revises 2019 growth target and projects at least 4% annual GDP growth until 2023
Finance Minister Mihaly Varga speaking at a conference
By Tamas Szilagyi in Budapest January 5, 2020

The Hungaran finance ministry revised the 2019 GDP forecast to 4.9% in its annual update of the Convergence Plan on December 21. GDP growth will drop to 4% next year and stay around that level until 2023, it added. The priority of the fiscal policy is to bring Hungary’s debt-to-GDP ratio below 60%, according to the statement.

In the year-end update, it expects GDP to expand by 40% in 2021 then grow by 4.3% in 2022 and 4.1% in 2023.

During the 2019-2023 forecast period, household consumption would expand at a slowing pace, growing by 4.3% in 2019 but by only 3.8% in 2023. Gross fixed capital formation will expand by 17.4% in 2019 followed by a steep drop to grow by only 4.1% in 2020 and 3.6% in 2021. Growth will pick up to 4.6% in 2022 but again drop to 3.4% in 2023.

Exports will increase between 5-6.3% during the forecast period and imports by 5-6.2%. Export growth from 2021 will outpace import growth. Net nominal wages will continue to increase, growing by 10.8% in 2019 with the growth rate gradually slowing to 8.1% in 2023.

The number of employed will continue to edge up, but growth will be the highest in 2020 and even then it will only be at 1.0%. Productivity will increase by 3.9% in 2019, by 3.0% in 2020 and by 3.2% in 2021. Inflation could be at 3.4% in 2019, fall to 2.8% in 2020 and remain at 3.0% until 2023.

The central budget's balance compared to the GDP should be negative 0.1% in 2019 but improve to 1.4% by 2020 and remain positive for the rest of the forecast period. ESA budget deficit is targeted at HUF860bn (€2.6bn) in 2019 and HUF485bn in 2020 gradually turning into a HUF2bn surplus by 2023.

The ESA deficit compared to GDP should be at 1.8% in 2019, 1% in 2020, 0.7% in 2021 and 0.4% in 2022.

The finance ministry said the most important task of fiscal policy remains to balance out general government spending by the end of the government cycle while pushing the debt-to-GDP ratio below 60%.

Economic protection measures already in place or planned for the next year will help to protect the results achieved and to maintain growth above the EU average, the ministry added.

 

Data

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