Hungarian economy likely to expand 4 pct in 2017, growth momentum to strengthen in 2018 – Danske Bank

The Hungarian economic growth continued to be solid in the third quarter, following a robust second quarter. The economy had expanded 3.9 percent year-on-year. This affirms the robust signals coming out of Hungary and could eventually raise worries about a possible overheating of the economy, noted Danske Bank in a research report.

Retail sales and industrial production expanded 6.3 percent year-on-year and 7.6 percent, respectively in October. This implies that solid momentum will continue in the fourth quarter. With solid growth figures for all the three quarters so far, the economy is likely to grow 4 percent in 2017 and remain solid in 2018, stated Danske Bank.

Meanwhile, inflation continues to struggle to reach MNB’s 3 percent target, with core inflation remaining at 2.7 percent year-on-year and CPI inflation reaching 2.5 percent year-on-year in November. With headline inflation remaining below the central bank’s 3 percent target, no imminent changes is expected it its dovish stance, but the strong economic growth is expected to drive up inflation eventually, leading to a change in policy by the central bank at some point in 2018.

“We still expect a change in policy stance during 2018”, added Danske Bank.

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