The World Bank upgraded its growth forecast for Hungary to 3.8% in 2019 in its latest Global Economic Prospects report from 3.2% in its previous report from January. The print is slightly higher than that of the IMF (3.6%) projected in April but more pessimistic than that of the government, which expects growth at 4.1% this year. The EBRD also expects somewhat weaker growth in Hungary in 2019 (3.7%) as well as the EC (3.7%). The divergence is more pronounced next year when the World Bank expects 2.8% growth in Hungary (IMF expects 2.7%, EC sees growth at 2.8%) while the government believes the local economy will expand by 4.0%. Growth is to continue moderating in 2021 when the WB forecasts it at 2.6% but yet, this represents an upgrade of 0.2pps compared to the previous report.
WB comments that diminishing slack is putting a lid on growth in Hungary, which is also the case for Poland. It also believes that capacity constraints and the projected deceleration in the Euro Area will slow the activity in those two countries. The WB also says that fiscal stimulus, and the resulting boost to private consumption, will begin to fade by 2020 in Hungary and some of the larger countries in the region like Poland and Romania.