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Hungarian GDP grows by 0.5 per cent in Q1

May 17th, 2016

A left-wing analyst commenting on the GDP data for the first quarter suspects that Hungarian economic output is not likely to grow as fast as PM Orbán would like to believe.

After last year’s rapid economic growth, Hungary’s GDP rose by 0.9 per cent year-on-year in the first quarter of 2016. The seasonally adjusted growth rate was 0.5 per cent.

In Népszabadság, Roland Baksa explains the slower growth rate by pointing out a temporary break in the EU structural plans payments. The last payments from the EU’s previous budget cycle were completed in 2015, and the transfer of new funds has not yet started in the first quarter of 2016, Baksa writes. As a result, construction output dropped by 30 per cent. But Baksa admits that the Hungarian economy is likely to grow at a faster pace later on this year. Once structural fund payments are resumed and car factories start producing new models, GDP growth could reach 2.2-2.5 per cent in 2016 according to analysts. Based on these estimates, Baksa finds it unlikely that the economy could soon grow by 5 per cent a year as desired the Prime Minister, who has said that such a faster growth rate would be necessary for Hungary to catch up with western European countries.

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