Hungary’s GDP is expected to grow by 4.6% this year, according to the OECD’s biannual forecast. “Economic activity is expected to rebound from mid-2021 onwards, as a swift vaccination rollout supports the recovery of private consumption.
External demand will strengthen with the recovery in major European trading partners,” the OECD said in its Economic Outlook. The projection is above the government’s official forecast of 4.3% economic growth. The OECD sees Hungary’s economy expanding by 5% in 2022.
Further improvements are expected on the labour market, with the jobless rate set to fall to 4% in 2021 and 3.4% in 2022, though, it added, high wage growth and the weak forint would add to inflationary pressures. The OECD said fiscal policy should remain supportive “until the recovery is firmly under way”.
“The government should maintain supportive fiscal policies in 2022 if supply-chain disruptions continue to restrain production or the recovery remains weak for other reasons,” it added.
Commenting the forecast, the finance ministry attributed the high growth rates predicted for Hungary this year and next to what has been one of Europe’s fastest inoculation programmes, the early easing of epidemic restrictions, and the economy’s resilience. The government’s comprehensive fiscal package containing wage subsidies, housing support and job-saving measures, is expected to lend additional impetus to economic recovery, the ministry said in a statement. Further, the OECD forecasts a robust rise in investments and exports, and a further drop in the unemployment rate, it said. Among the Visegrad Four countries, Hungary’s economic recovery will be the quickest this year, the ministry added.