Hungarian economy likely to slow down moderately in Q4, to decelerate to lesser extent in 2020

The Hungarian economy has been quite resilient to the global slowdown so far. The economic growth expanding 5 percent year-on-year in the third quarter of 2019. The structure of growth became more balanced, as the contribution of net exports to GDP turned positive, reflecting the strong performance of the vehicle manufacturing industry, partially because of the production of new car models. In the meantime, the performance of investments and consumption continued to be the main drivers, growing 4.2 percent year-on-year and 16.1 percent year-on-year respectively.

“We expect just a moderate slowdown of growth for the last quarter; thus, annual GDP growth would again be around 5 percent in 2019”, said Erste Group Research in a report.

The economy is expected to decelerate in 2020, albeit to a lesser extent that predicted earlier. Possible negative impacts of global economic risks have been looming, mainly affecting GDP through the export channel. Moreover, investments might also decelerate.

High employment and wage rises are expected to remain, while a fiscal package is also planned translating into continued solid consumption.

“Meanwhile, the monetary policy could preserve its accommodative stance, further supporting the lending activity of banks. The economy is set to grow by 3.5 percent y/y in 2020”, added Erste Group Research.