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GDP Growth Expected To Be Below 7% In 2021

HUNGARY
  • This morning, Hungary's Finance Minister Mihaly Varga mentioned at an event that Hungary GDP growth is now seen at less than 7% for this year.
  • We recently saw that CEE region was starting to reintroduce new Covid restrictions in order to limit the downside risk of a fourth wave of infections.
  • Hence, the rise in Covid uncertainty is likely to result in a significant downward revision in growth expectations, which could weigh on Hungary (and other CEE economies) risky assets.
  • According to its minutes of the Oct 19 meeting, policymakers voted unanimously for a 15bps hike.
  • However, the elevated inflation combined with the currency weakness (supporting inflation expectations) could push the NBH to increase the pace of its tightening cycle back to 30bps.
  • Next important data to watch will be CPI inflation coming out on November 9.

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