Hungarian central bank (MNB) executive director and economist Barnabas Virag provided guidance at a conference yesterday that the nation’s GDP growth is likely to rebound to 1.5% y/y-2% y/y in the second quarter from 0.9% y/y growth in the first quarter. This suggests about 1.2% growth on sequential basis in Q2 after a decline of 0.8% q/q in Q1. Together, this signifies that the Hungarian GDP will expand at a modest rate of just 0.29% in the first half of 2016, as compared to the second half of 2015, said Commerzbank in a research report.
“We hold a sub-consensus 2.2% growth forecast for full-year 2016”, added Commerzbank.
The MNB’s official forecast for 2016 growth is 2.8%; however, governor Gyorgy Matolcsy has mentioned lower expectations of around 2.2% recently. The central bank has closed the rate cutting cycle, but there is a possibility for additional cuts by winter, particularly if low inflation in the euro area were to compel the ECB to lower rates again, noted Commerzbank.
