Hungary’s economic growth accelerated more than economists forecast in the third quarter, boosting Prime Minister Viktor Orban before next year’s parliamentary election.
Gross domestic product rose 0.8 percent from the previous three months after a revised 0.4 percent advance in the second quarter, according to preliminary data published by the Budapest-based statistics office today. The median estimate of 11 economists in a Bloomberg survey was 0.4 percent. GDP rose 1.7 percent from a year earlier, the fastest since January-March 2011, compared with the 0.8 percent forecast economists.
Orban, whose party leads opinion polls before elections in the second quarter of next year, is seeking to fortify a recovery from last year’s recession while keeping the budget deficit within the European Union limit of 3 percent of GDP. The government estimates growth of about 1 percent this year and 2 percent next year, Economy Minister Mihaly Varga said yesterday, state news service MTI reported.
“The sectors connected to car production are where we’re seeing expansion within industrial manufacturing,” statistician Balint Murai told reporters today.
The central bank has lowered borrowing costs for 15 consecutive months, cutting the benchmark by more than half to a record-low 3.4 percent in October to buoy the recovery. The bank is also providing 2.75 trillion forint ($12 billion) in interest-free loans to commercial lenders to boost credit to small and medium-sized companies.
Orban has pinned his economic policies on the introduction of a 16 percent flat personal-income tax, which failed to avert a recession last year while causing fiscal revenue to drop. The cabinet has relied on extraordinary industry taxes from banking to energy to plug budget holes.
Hungary’s credit rating was affirmed at non-investment grade with a negative outlook by Standard & Poor’s, which for its Oct. 25 decision cited the country’s “weak” growth prospects and high debt level for its decision. The government debt level was 81.1 percent of GDP through the second quarter, the highest among eastern EU members.
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