Hungarian economy expands in Q4 2017, economy likely to grow 3.8 pct in 2018

Hungary’s economy expanded faster than anticipated in the last quarter of 2017. The Hungarian economy grew 4.4 percent year-on-year. From the supply side, market services and the construction sector mainly drove the economic growth. Based on the monthly available figure, the households consumption might be one of the largest contributor to the economic growth, stated KBC Market Research in a report. In spite of the favorable international environment, the next export might pull back the Hungarian economy as import dynamic surpassed the export one.

The industrial production showed poor monthly figures for the fourth quarter, so it might have contributed less to the economic growth. The low base in 2016 also underpinned the high GDP growth figure. The Hungarian economy expanded 4 percent year-on-year in 2017 and by 4.2 percent year-on-year adjusted by working days.

Looking ahead, the structure of the growth might be quite similar as it was in 2017, so households consumption and investment might stimulate the Hungarian economy, stated KBC Market Research. The former one is stimulated by the net real wage rise, while the latter one by the EU funds money and government spending. Moreover, both are underpinned by rising lending activity as well. Regarding the sectors, the market services might be the biggest contributor to the growth, but construction might add little less, while industrial production might contribute more to the growth in 2018 than in 2017.

“Overall, we expect this year’s economy growth around 3.8 percent Y/Y”, stated KBC Market Research.

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