Growth is forecast to moderate to 1.5% in 2016, before picking up to 2.0% in 2017. Households sustain growth GDP growth in Hungary declined to 2.4% (y-o-y) in 2015-Q3 from 2.7% y-o-y in 2015-Q2. However, the figure was better than the 1.6 percent growth estimated for 2015.
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In the European Union, the rate of unemployment is now expected to fall to 9% this year, from 9.5% in 2015.
Throughout the forecast, the commission highlighted risks emerging from China and stronger-than expected market turmoil there.
In the European Union, consumer prices are expected to grow 1.5 per cent this year and 1.6 per cent next year.
Unemployment rates in euro zone countries will continue to fall but at a slower rate and the bloc’s average will stay just above 10 percent during the forecast horizon.
“The European economy is successfully weathering new challenges this winter, supported by cheap oil, the euro rate and low interest rates”, said Pierre Moscovici, the EU commissioner for economic and financial affairs. It said that newly arrived refugees and asylum seekers have so far boosted consumption in the main reception countries and could help growth in the future if they can be successfully integrated. Imports growth is expected to reach 4.1% and 5.5%, respectively.
The economic growth of the euro area is projected to grow from 1.6 % in 2015 to 1.7 % this year and further to 1.9 % in 2017, while the EU’s GDP growth is expected retain its level from last year – 1.9 % and increase to 2 % in 2017.
HICP inflation is forecast to return to above 2% by 2017 on the back of higher energy inflation, reflecting the expiration of the low base effect from cutting electricity tariffs for households in 2016 and a gradual recovery in oil prices in 2017.
The commission said that, while the recovery started in the external sector, domestic demand is now driving GDP growth.
Net exports are forecast to contribute positively to growth, but to a lesser extent than in 2016, driving the current surplus wider. Poland’s budget deficit is to remain at 3 percent of GDP this year, however it may grow to 3.4 percent in 2017, the EC predicted.
This will be largely due to higher revenues from taxes thanks to improved tax administration, increase in excise duties and social security contributions. The Russia-Ukraine crisis and weak demand in the euro area are now forecast to have a smaller impact than previously expected.
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The structural deficit ratio is estimated to have remained stable in 2014.
