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2018/12/11 / Erste Group Research

Hungary Macro Outlook

Following the 2018 GDP growth, expected at 4.6% annually, the economy may
slow down to 3.6% y/y in 2019, in line with slowing investment activity and
exports. On the other hand, household demand could remain strong, mainly
supported by continuing wage increases. The contribution of net exports to
GDP growth might remain in negative territory, as the expected global
economic slowdown might worsen export prospects, while growth of imports
could remain relatively high. As a result, the surplus on the C/A balance could
further decline. Annual average inflation might be 3% in 2019.

Normalization of monetary policy could be a rather slow process in 2019 and
the 3M BUBOR rate is unlikely to reach the level of the policy rate before 2020,
in our view. We note that the monetary policy decisions of the ECB should
have crucial impact on the MNB. The forint might stabilize in the range of
320-330, with a point estimate of 325. Mainly due to the expected decline of
public debt to GDP figures, we expect at least one credit rating upgrade for
2019 from either S&P or Fitch.

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General information

AuthorErste Group Research
Product nameCEE Country Macro Outlook
Topic in focusFX, Macro/ Fixed income
Economy in focusHungary
Currency in focusHungarian Forint
Sector in focus-


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