Hungary overview

Tram

In Hungary we focus on:

Strengthening banking sector resilience and the capacity to lend. To the extent that the measures agreed under the 2015 Memorandum of Understanding are consistently implemented, the Bank will be able to support the financial sector in areas such as privatisation and will also support sector consolidation and seek to help banks by providing long term funding on sustainable and commercial terms. The Bank will also continue its cooperation to enhance the framework in support of NPL resolution.

Improving further Hungary’s energy security through strengthening market based regional interconnections, optimising the use of storage capacities and enhancing energy efficiency. The Bank will seek a role in supporting key energy infrastructure projects, including commercial gas interconnections to facilitate the two-way flow of gas and to develop a Hungarian gas exchange. With regard to energy efficiency, significant challenges remain and consequently the potential exists for the Bank to be actively involved in energy savings projects.

Enhancing competitiveness and addressing innovation gaps. The EBRD will support local companies in catching up to the technological frontier, directly and through private equity channels, and will also help them become more competitive. The Bank will pay particular attention to companies operating in the less developed regions. It will also look to build more commercial and competitive market structures in targeted sectors, such as municipal and inter-city transport, to address inefficiencies, insufficient private sector participation and the need for restructuring.

The EBRD’s latest strategy for Hungary was adopted on 23 March 2016
 
 

Current EBRD forecast for Hungary’s real GDP growth in 2017: 3.0%
Current EBRD forecast for Hungary’s real GDP growth in 2018: 3.0%

Following some deceleration in 2015, economic growth in Hungary saw a further slowdown in 2016. In annual terms, investment dropped by over 15 per cent by mid- 2016, largely affected by weak EU funds inflows from the new budget. Private consumption strengthened further, particularly underpinned by decent growth in real wages, which soared by about 7 per cent in June, and improving labour market conditions. In volume terms, export growth remained robust, though its net contribution to GDP growth was largely offset by strong private consumption-driven imports. Growth in investment will likely gain momentum next year, owing to government fiscal stimuli, higher expected FDI inflows (partially linked to factory expansion projects of Audi and Mercedes) and accelerated disbursement of EU funds. We expect GDP growth at 2 per cent this year, before it accelerates to 2.4 per cent in 2017.

Hungary in the EBRD’s 2016-17 Transition Report

Hungary in the latest BEEPs survey