Hungarian economy is expected to grow by 2.2% in 2014, speeding up from a 1.2% rise expected in 2013, Oxford Economics said in a fresh forecast. The growth will be supported by domestic demand, while a material pick up in external demand will occur only in H2 2014. In particular, private consumption is projected to grow by 1.3% in 2014, reversing from a 0.2% drop in 2013. The annual growth rate of fixed investments will accelerate to 3.7% next year. At the same time, the government consumption will increase by 0.9%, slowing down from a 1.1% hike expected in 2013. Hungary’s exports and imports will advance by 4.8% y/y and 5.1% y/y, respectively.
Oxford Economics sees the annual inflation in the country at 2.1% in 2014, higher than this year's forecast of 1.7%. Despite this, the researcher expects further easing of the monetary policy and the base interest rate is expected to be cut by 50bps by the end of Q1 2014.
Hungary's general government deficit is forecasted at 2.7% of GDP in 2014, broadly in line with government’s expectations.
In its risk assessment Oxford Economics said Hungary remains vulnerable to a renewed downturn in the Eurozone, despite the recent rebound. Consequently, the country’s risk index increased by 2pps to 50% in 2013. Oxford Economics evaluates countries’ economic risk on a scale from 0 (no risk) to 100 (highest risk).
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