Hungary’s GDP has not yet reached its 2019 level. The main negative risk of GKI’s forecast is the extension of the substantial restrictions caused by the epidemic into the second half of the year. However, as next year’s elections approach, it could be stimulating if the government encourages a further loosening of fiscal policy, they noted.
According to GKI, employment and unemployment will remain broadly unchanged as an annual average, but these will improve during the year. Real wages will rise by 2 percent, consumption by 3.5 percent and investment by 6 percent.
Inflation will accelerate from 3.3 percent to 3.9 percent according to the GKI forecast.
The annual average exchange rate of the forint against the euro may be at least HUF 365 after HUF 351 in 2020, and it cannot be ruled out that MNB will be forced to tighten, GKI experts believe.
The external balance will show a stable surplus, thanks to the expected inflow of EU transfers.
Although the development of companies is supported by significant amounts of cheap resources, due to the uncertain size and structure of future demand, many companies are postponing previously planned investments for the time being.
This year, construction, industry and transportation are expected to expand the fastest, and only tourism, hospitality and the real estate sector are expected to decline further.
According to GKI’s expectations, the general government cash deficit will decrease from HUF 5.54 trillion in 2020 to HUF 3.7 trillion, from 8.1 percent of GDP to about 6.5 percent. Government debt as a share of GDP may have hit 81 percent in 2020 and is likely to remain at that level in 2021, according to GKI’s spring forecast.