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Hungary sees GDP growth exceeding 4 pct in next two years

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Staff Writer | December 21, 2016
Hungary's government sees economic growth accelerating to over 4 percent in the next two years, the Economy Ministry said.
Viktor Orban
Europe   A batch of stimulus measures
This came after unveiling a batch of stimulus measures as Prime Minister Viktor Orban eyes elections in 2018.

The sharp upgrades in the growth outlook follow an agreement with private sector employers on big hikes in the minimum wage for the next two years in return for cuts in payroll taxes and a reduction in the corporate tax to a flat 9 percent.

"The agreement substantially affects the macroeconomic developments of the coming years, putting the Hungarian economy on a higher growth trajectory," the ministry said, adding that the main driver of growth would be higher consumption.

Orban's cabinet sees economic growth rising to 4.1 percent next year and 4.3 percent in 2018, when elections are due, the Economy Ministry said, up from its previous 3.1 and 3.4 percent projections.

The 2017 budget is based on a projection of revenues worth 66.5 billion forints from the bank levy, which was lowered this year following an agreement between Orban's government and the local bank sector.