The View 7th edition

Source: CBRE Research, Oxford Economics

GDP Growth and Forecast - Selected Countries

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2018 2019-23 (forecast)

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Ireland Hungary Central Europe USA Netherlands Spain

Eurozone Germany Russia France UK Italy

is one third above its level in 2014. However, Hungary is still ranked among the countries with the lowest actual individual consumption figures in the whole EU. Accommodation and food services continued to expand by a rate over the average, as tourism revenues rose by ca. 10% y-o-y, boosting demand for hotel- and retail real estate. ABSENCE OF INFLATIONARY PRESSURE DESPITE STRONG WAGE INCREASE The strong economic growth has coupled with a significant increase of employment. Roughly 4.5 million people are currently working in the economy, up from 3.7 million since 2010, the bottom of the cycle. The average unemployment rate has reached a new all-time low of 3.6%, although the downward trend flattened in 2018.

Unemployment in Budapest hit 1.3% as of January 2019, while the same rate is above 4%only inDebrecen and Miskolc across the key regional cities. The lack of available labour remains the most critical issue across practically every business segment and region in the country. Thus, it is hardly surprising that wages kept rising throughout 2018; the monthly average gross salary reached ca. HUF 350,000 (ca. EUR 1,100) by year end, up by 11% in a year and by ca. 45% since 2014. After a hike of 25% in two years, minimal wages are set to increase by a more moderate 8% per annum in 2019 and 2020. However, it is still to be seen whether wage growth will subdue in sectors with serious labour shortage. Despite the strong wage dynamics and robust economic growth, inflation has not spun out of control. The consumer prices index sunk back to 2.7% by the end of 2018 and is forecast to hover around 3% in 2019 – in line with the MNB’s target rate.