Népszava GKI: growth is slowing

From the second to the second, we can easily be the last in terms of economic growth. The monthly prognosis of the GKI Economic Research suggests a strong slowdown next year.

This year GDP growth will be reduced from 4.2 percent next year to almost 3 percent, which is already the lowest in a less subdued region – according to the GKI Economic Research Monthly Prognosis. It is expected that the growth in household consumption will slow down from the rest of the year and that more uncertainty and cutbacks are also expected in the EU.

Wage and salary workers are good news that gross profit dynamics are only slowly decreasing, but it is less gratifying that inflation is accelerating, resulting in slightly lower growth of 7-8 per cent than last year's growth figures, but still very high. The six-year increase in consumption by 4.5 percent this year is likely to reach its peak this year, and the purchased consumption is growing faster and 5.5 percent.

Unemployment has fallen slightly compared to the end of 2017, but the number of public employees is moderating. Official unemployment in Czechoslovakia and Germany is the third lowest in the EU. However, the number of public employees still reaches the unemployed and the Hungarian unemployment rate is around the EU average (7%).
Inflation accelerated in July for the fifth month and reached 3.4 percent. This is the third highest in the EU after Romania and Bulgaria. There may be some further increases during the year due to the weak forint, an average annual percentage of approximately 3%.

In the first seven months of 2018, the cash deficit of the government was almost HUF 1500 billion, almost 10 percent higher than the year before. Since tax revenues were generally favorable, the main reason for this is the anticipation of EU grants and other budget expenditures (eg the Modern Cities program), independent of upcoming local government elections. The deficit in the EU methodology, which does not take into account the anticipation of EU transfers, is likely to be slightly less than planned (but above 2017), about 2.2 percent. At the same time, the general government deficit is expected to remain only slightly below the EU's expectations and remain above 73% of GDP, due to the high cash flow deficit.

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