picture of EBRD headquarters

Economies in Europe’s emerging region, including Hungary, are likely to recover from the coronavirus outbreak at a much faster pace than previously expected, according to a recent forecast by the European Bank for Reconstruction and Development (EBRD) in London on Thursday.

In the Central and Eastern European region, the EBRD gives the strongest growth forecasts for the Estonian and Hungarian economies. The EBRD expects the growth rate of the Hungarian economy to approach 8% this year.

However, in a 42-page autumn forecast, the financial institution also foresees high prices for natural gas, crude oil and other commodities, which put a strain on the trade balance of the region’s energy-importing economies and drive up inflation.

After last year’s 5% decline in the Hungarian economy, the bank expects 7.7% growth this year, which is 2.2 percentage points faster than in its previous June forecast. The EBRD expects Hungary’s GDP to grow by 4.8% next year, which is unchanged from their previous forecast.

In the Central European and Baltic EU region as a whole, the bank expects an average GDP growth of 5.2% for 2021 and 4.7% for 2022, 0.4, and 0.1% faster respectively than in its June forecast.

The chapter on Hungary in the EBRD’s regional forecast highlights that Hungary’s gross domestic product grew at a “remarkable” rate of 7.6% year-on-year in the first half of this year, driven by strong investment and significant government spending.

London-based financial institution EBRD was set up in 1991, exactly thirty years ago, to support the transformation of Central and Eastern European economies and the former Soviet region.

[Magyar Hang / MTI] [Photo: EBRD Headquarters, London]

By Steven