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2019/12/10 / Erste Group Research

Hungary Outlook | Internal drivers strong amid global uncertainties

Following the outstanding annual GDP growth of 4.9% in 2019, the economy is set to slow down to 3.5% y/y in 2020. Strong internal engines - especially consumption – should further fuel the economy, while global growth risks might slow down export growth. Inflation could remain volatile with headline and core inflation rates expected to move in the upper level of the tolerance range. The inflation is likely to have dual character: pro-inflationary effects of surging wages and consumption might partly be offset by moderate imported inflation.

The monetary policy is expected to preserve its accommodative stance as long as the ECB remains dovish. The MNB keeps actively managing the short end of the interest rate curve in order to keep rates low and stable. Long-term bond yields should move in parallel with major bond yields. Fast changes of global market sentiment, the disappearing C/A surplus and extra-loose stance of the domestic monetary policy have led to a weakening of the forint. We do not expect a unanimous trend in movements of the domestic currency; the EURHUF could trade in a volatile range around our 335 point estimate.

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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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