The International Monetary Fund increased its projection for economic growth in Hungary for this year and the next and also raised its forecasts for annual average inflation for both years in its fresh World Economic Outlook published on Tuesday. The fund raised its forecast for 2017 global economic growth marginally, to 3.5% after 3.1% growth last year. The forecast for 2018 is 3.6%. The IMF now expects 2017 GDP growth in Hungary to pick up from 2% last year to 2.9% rather than to 2.5% as in the previous outlook released in October 2016. It raised its forecast for the 2018 growth rate to 3.0% from 2.1%.
The report contains the main forecasts for Hungary without a comment. The projection is still well under the government’s respective official forecasts. In an update last December, the Hungarian economy ministry raised its forecast for 2017 GDP growth to 4.1% from 3.1% and projected a further slight acceleration in the growth rate, to 4.3% in 2018, citing the expected boost to employment, growth and consumption, stemming from a six-year wage agreement signed one month earlier.
The IMF now forecasts Hungarian consumer prices to rise on average by 2.5% this year and by 3.3% next year, significantly quicker than the respective 0.8% and 2.6% rates projected in the October report. The IMF’s fresh projections exceed the economy ministry’s projections for 1.6% average annual inflation in Hungary in 2017 and 3.1% in 2018. The IMF sees Hungary’s current account surplus narrowing to 3.7% of GDP in 2017 rather than to 4.6% and projects less squeeze next year: to 3.0% instead of 1.4% of GDP. Part of the changes could stem from a lower than forecast current account surplus, of 4.3% of GDP, in 2016.