- 11 Apr 2018 11:34 AM
- Hungary Matters
This will support strong growth this year, though risks of macroeconomic imbalances emerging had increased in the wake of rapidly rising wages and housing prices.
“Tighter [monetary] policy is reflected in our 3% 2019 growth forecast.”
In a separate note, financial consultancy Capital Economics said a more general economic challenge facing Fidesz in its third term was the late stage of the economic cycle. After several years of rapid economic growth, capacity constraints are starting to mount, it said.
Although inflation has been soft in recent months, it is likely to rise over the course of the coming parliamentary term, the consultancy added.
Economic growth is likely to be constrained by Hungary’s potential GDP growth rate, which is around 2.0-2.5%, and there is a growing risk of monetary policy being kept too loose for too long, Capital Economics said.