Hungary: Staff Report for the 2014 Article IV Consultation

IMF Staff Country Reports, June 6, 2014

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Bibliographic details

• Published: June 6, 2014
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9781498395069.002

Overview

• Hungary’s economy emerged from the 2012 recession and posted 1.1 percent growth in 2013.
• Growth in 2013 was mainly driven by government investment and consumption, and also net exports.
• Private demand strengthened on the back of accommodative monetary conditions and improved market confidence, but remained weak.
• Credit to the retail and corporate sectors continued to contract, albeit at a slowing pace.
• Hungary’s medium-term growth prospects remain subdued due to ongoing household balance-sheet repair and a weak business environment weighing on private investment.

Growth and drivers

• 2013 GDP growth: 1.1 percent.
• Principal growth contributors cited:
  • Government investment and consumption.
  • Net exports.

Private demand and credit conditions

• Private demand: strengthening but still weak.
• Monetary conditions: described as accommodative.
• Market confidence: described as improved.
• Credit dynamics:
  • Credit to retail sectors: contracting, but at a slowing pace.
  • Credit to corporate sectors: contracting, but at a slowing pace.

Medium-term outlook and constraints

• Medium-term growth prospects characterized as subdued.
• Key constraints:
  • Ongoing repair of households’ balance sheets, which hampers private consumption.
  • Weak business environment, which continues to weigh on private investment.

Key subjects and keywords highlighted

• Subjects: Banking; Credit; Expenditure; External debt; Financial institutions; Fiscal policy; Loans; Money; Public debt.
• Keywords (as listed): control environment, CR, Credit, credit squeeze, financing, Global, headline inflation, Hungary's economy, inflation expectation, ISCR, labor market condition, largely not observed, liability positions vis-à-vis nonresident, Loans, monetary policy, policy predictability, Policy recommendation, risk perception, support Hungary's advancement.

Hungary: Staff Report for the 2014 Article IV Consultation, June 6, 2014

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