The World Bank projected GDP growth to slow down to 2.6% in 2016 in Hungary, according to the WB’s Global Economic Prospects report. The forecast was improved by 0.1pps from the previous forecast from January. On the other hand, the WB completely reversed its view on the mid-term growth outlook, negatively revising the expected economic growth in 2017 and 2018. The current projection expected GDP growth to continue to weaken to 2.4% in 2017 and 2.3% in 2018 while the WB had previously forecast a gradual recovery in growth as of 2017.
The WB report did not show the reasons for the marked change in the growth outlook for the mid-term. We think that one of the possible reasons could be the negative revision of the global growth expectations although the revision for the eurozone, which is Hungary’s main trading partner, was very small. The WB’s forecasts are somewhat in line with the IMF’s projections for GDP growth in Hungary from April, which also did not show significant growth recovery after 2016 based on weaker net export contributions.