The Hungarian economy is performing above expectations: unemployment is falling, wages are rising, inflation is low and investments are booming. As a result, think tank Századvég has raised its GDP forecast for 2018 to 4.4 percent, Origo reports.
In the second quarter of the year, GDP growth reached 4.6 percent, mainly fuelled by consumption and investments. While Századvég expects a moderate slowdown in economic growth next year mainly as a result of external factors, its 2019 forecast is still a solid 3.5 percent.
In the first seven months of the year, wages increased by 12.1 percent. Adjusted for inflation, that still comes out to a 9.4 percent boost in real wages. Tourism and retail revenues are up by 6.8 and 8.9 percent, respectively, and Hungarians are also spending more of their holidays abroad.
As a result of higher wages, the state’s income tax revenues have also grew by 13.9 percent in the first half of 2018. Unemployment has reached its lowest since the regime change in 1990 at 3.6 percent.
A lasting 5 percent depreciation of the Hungarian currency, however, means that inflation is expected to somewhat exceed the Central Bank’s target and come in at 2.8 percent in 2018 and 3.3 percent in 2019. Századvég projects a budget deficit of 2.0 percent for 2018 and 1.7 percent for next year.