Hungary to Boost Growth Above 4%

After a disappointing slowdown this year, Hungarian GDP growth is expected to pick up in 2017 to 4.1% y/y, the updated growth and fiscal forecast of the country’s economy ministry showed on December 20, Intellinews reported. The optimistic forecast reflects hopes that a massive stimulus package passed earlier this month will support strong private consumption and boost investments. At the same time, the ruling Fidesz party likely expects that the measures will cheer up the growing number of dissatisfied voters ahead of the 2018 elections. Revising downwards its original full-year growth projection of 2.5%, the cabinet expects that–mainly reflecting a lull in EU-funded projects this year—real GDP growth in Hungary will ease to 2.1% this year from 2.9% in 2016. The government will hike the minimum wage by 15% in 2017, and a further 8% in 2018; social contributions will drop 5 percentage point to 22% and to 20% in 2018. Budapest will also lower the corporate tax rate to 9%, which will be the lowest in the EU.