Hungary

Hungary: strong growth

The Hungarian economy is growing at a strong pace supported by loose monetary policies and improved market sentiment, despite weak economic activity in the euro area. The EPI grades Hungary’s current economic performance at a solid B- level, with the EPI score projected to be close to 90.9% in 2016.

A surge in investment and private consumption boosted GDP growth to 3% in 2015 and to expected 2.5% in 2016, despite weak economic activity in the euro area. The unemployment level remains elevated at 7% and the government is providing some fiscal stimulus, with the projected budget deficit of 2.3% in 2016. Inflation remains at zero, driven by low commodity prices and disinflationary environment in Europe.

The 5-Minute Economist projects Hungary’s EPI score to decline slightly in the medium term from almost 91% currently to 91.4% by 2020 but still stay at the solid B level, mainly driven by a gradual pick-up in inflation. GDP growth is likely to slow down as well, as the government fiscal support would be gradually decreased as well the level of the budget deficit.