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Hungarian GDP grows by 4.7 per cent

May 18th, 2018

As the Central Statistical Office reports first quarter GDP data, analysts across the political spectrum wonder if fast growth can be maintained in the long run, and whether the Forint will weaken against the Euro. 

On Tuesday, the Central Statistical office reported that in 2018 Q1, seasonally adjusted economic growth was 4.7 year-on-year. 

Assessing the growth data on Napi.hu, Dániel Szabó is skeptical  whether fast growth can be sustained. Szabó thinks that fast growth is the result of higher wages rather than increased industrial output. He predicts that GDP growth will soon slow down due to the shortage of labour, although the government and the National Bank will use every fiscal incentive available to them. Szabó deems it unlikely that the Hungarian economy can sustain higher than 4 per cent growth until 2022, as planned by PM Orbán.

Magyar Idők’s Gergely Kiss dismisses such fears of an economic slowdown. The pro-government commentator suggests that the Hungarian economy has performed well above the EU average, and even above regional benchmarks. Kiss thinks that concerns over rising wages are unfounded, as higher wages are necessary not only to maintain internal demand, but also to slow down or even reverse emigration, and thereby ease the shortage of labour. As the Hungarian economy has performed well since 2010, Kiss is optimistic that the government’s critics will be proven wrong again in their pessimistic predictions.

Writing in Népszava, Miklós Bonta thinks that the Hungarian economy will slow down, unless the government boosts public debt in order to maintain high levels of demand. The left-wing pundit contends that the structure of Hungarian industry has not been reformed, and thus higher growth is possible only through increased internal consumption. All this, Bonta believes, will be financed from loans as EU cohesion funds run out, and so Hungary will soon suffer from increasing external debt. Bonta notes that the Forint has already weakened against the Euro to a 2-year low.

In Figyelő, Csaba Szajlai suspects that the weakening of the Forint is only temporary. The conservative economist interprets indicators as suggesting that the Hungarian economy and investments are on the rise. Szajlai recalls that regional and other emerging currencies have weakened far more than the Forint over the past week. As global sentiments change, the Forint will soon recover – even without the intervention of the National Bank, Szajlai concludes.

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