Hungary’s debt-to-GDP ratio may have actually dropped in 2014, the latest GDP data released by the Central Statistical Office (KSH) showed on Friday. A preliminary estimate published by the central bank (MNB) three weeks ago was that Hungary’s debt ratio stood at 77.3% at the end of last year, which marks no change compared to a year earlier. Now, calculating with a precise GDP data for last year, we get a 76.9% debt ratio.
The better-than-expected figure is related to the fact that the stats office recorded 6.5% nominal GDP growth in annual terms in the last quarter of 2014, which greatly beat expectations. Whereas the MNB already had a figure for real GDP growth when it estimated the debt ratio, it did not know at that time how large nominal GDP this meant since it would have had to know the GDP deflator too.
Now we know that the GDP deflator was 3%. This explains the “mistake" in the estimate as the central bank most likely did not expect such a high figure from the KSH at a negative consumer price index.
Hungary’s nominal GDP was HUF 31,891 billion and Maastricht debt stood at HUF 24,521 which gives us a debt ratio of 76.9%.
The stats office has delivered a series of surprises with its GDP deflator figures throughout the year. The annual average figure at 3.2% is also rather high compared to the -0.2% CPI.
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