Hungary’s GDP is expected to grow 3.8% with construction slowing, even though agriculture will see some improvement, according to the economic research institute GKI.

Last year, Hungary’s GDP expanded 4%, faster than expected and considerably faster than the EU average, its growth rate remained comparatively moderate in the CEE region, GKI notes.

As reported by the Budapest Business Journal, the institute says it is not changing its GDP growth forecast of 3.8% and investment growth forecast of 9% for 2018.

Although last year’s boom in construction will slow in 2018 due to the high statistical base, this sector continues to grow fastest, GKI observes. Similarly to last year, GKI predicts industry will expand by 5% in 2018.

The decline in agriculture in 2017 is expected to be followed by some improvement this year, says GKI. Public administration will stagnate, whereas some acceleration can be expected in the financial sector, it adds.

The three main problems of Hungarian economic policy, as noted by GKI, are the elimination of competition, the erosion of human capital, and international isolation.

GKI also notes that, after the elections, it will be necessary to reconsider Hungary’s European policy, including the introduction of the euro, which will inevitably affect the Hungarian model as well. Also, its forecast does not deal with the outcome of the elections. Instead, GKI points to what it believes would be expedient to do, whoever wins.

GKI also noted that this year’s GDP growth could surpass its forecast of 3.8%, fuelled by the more favourable performance of agriculture and a more dynamic increase in domestic consumption. However, it warned that the price of the latter would be a deterioration in external equilibria in excess of projections.