Page 11 - Central & Southeast Outlook 2020

Consumer prices (eop, % yoy) 0.9 1.1 2.1 2.7 4 3.4 3.4
General budget balance (% of GDP) -2 -2 -2 -2 -1.7 -1.5 -1.3
Public debt (% of GDP) 75.2 73.9 73.3 71 68.2 67.5 65.6
Current account balance (% of GDP) 3.4 6.2 3.1 0.5 -0.6 -0.8 -0.7
Official FX reserves (EUR bn) 30.5 24.5 23.3 27.4 24.4 25.4 26.4
Gross foreign debt (% of GDP) 106.2 97 86.3 79.2 73.7 70 66.5
EUR/HUF (avg) 309.9 311.5 309.3 318.8 325.3 334.7 339
USD/HUF (avg) 279.4 281.6 274.3 270.3 288.4 296.2 289.2 Source: National sources, RBI/Raiffeisen RESEARCH
Hungary's economy beat analysts' projections from quarter to quarter in 2019, posting one of the highest growth rates in Europe throughout the year despite the unfavourable external environment. The country was ranked first in the EU28 with GDP rising 5.1% in the first nine months. International organisations, the government, and the central bank have upped their full-year forecasts to close to 5%.
Economic growth was supported by an increase in domestic demand, investments and exports. Growth will continue in a balanced structure with all sectors chipping in next year. Although the growth rate of consumption is expected to slow down it will remain one of the most important factors in GDP growth, as will market-based services.
Hungary's economic success is largely attributed to the strong performance of the vehicle and electronics sectors, which attracted the most investments in 2019. Capacity expansions in these two areas helped industrial growth to approach 6% in 2019, in the midst of trade tensions and the slowdown in global industrial production.
The output of Hungary's vehicle sector depends largely on the state of the German economy, the country's largest export market with sales expected to reach €30bn, or 30% of the total, in 2019. A slump in demand in the eurozone could hit vehicle makers and suppliers hard.
Hungary's economic growth will decelerate in 2020 but forecasts vary widely. The central bank bumped up its 2020 forecast to 3.7% from 3.3%, and the forecast for 2021 to 3.5% from 3.3%. It projected — for the first time — economic growth of 3.5% for 2022.
For 2020, the European Bank for Reconstruction and Development (EBRD) sees growth falling to 3.1%, the Organisation for Economic Co-operation and Development (OECD) to 3.3% and the World Bank to 3.5%. The most bearish forecast was made by the European
11​ CESE Outlook 2020​ ​ ​www.intellinews.com