The European Commission has projected the Hungary GDP will grow by 5.0% this year, in a spring economic forecast published on Wednesday. The projection was raised from 4.0% in the EC’s winter forecast released in February.
Hungary’s government puts 2021 GDP growth at 4.3%. The EC’s fresh projection for average GDP growth for the European Union is 4.2%. The EC said Hungary’s economy was expected to expand by 5.5% in 2022.
“Household consumption is poised to rebound thanks to steady real income growth, and the increasing ability and willingness, of consumers to spend once restrictions are lifted,” the EC said. It pointed to the improving labour market’s positive impact on household income, the gradual reintroduction of an annual pensioners’ bonus, and a personal income tax exemption for Hungarians under 25 from 2022.
Rising capacity utilisation as well as government subsidies are expected to boost private investment, while grants from the EU’s Recovery and Resilience Facility (RRF) are expected to keep public investment at around 6.5%, the forecast said.