Contents. What to watch next week. What to watch in the week ahead Summary of recent macro and market events Forecast tables Macro diary

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1 Contents What to watch in the week ahead Summary of recent macro and market events Forecast tables Macro diary What to watch next week Local market movers The key event of the forthcoming week is going to be the NBH s rate-setting meeting, although we do not expect any changes in the monetary conditions. The market will scrutinize the statements for clues of how the central bank sees the surprisingly strong GDP figures and the November CPI reading that was much higher than the NBH s forecast. Still, we do not expect any major changes in the communication, the statement will likely say that the t MC will review the new macro projections to be released in December before deciding whether to make any changes to the monetary policy outlook.

2 External developments Flash November PMI readings will be in the focus in the euro zone. The indices may point to some sort of stabilization in economic activity. Negative surprises may strengthen the case for delaying the first ECB rate increase (expected for Q4 2019). Brexit developments may have a visible impact on market sentiment, too. US data releases (housing, durable orders) are highly unlikely to alter the monetary policy outlook, the FOMC is widely expected to deliver the next rate hike in December. Summary of recent macro and market developments Robust Q3 GDP growth Hungary s Q3 GDP posted a growth rate well above the market consensus of %, reaching 4.8%. The seasonally and working-day adjusted (swda) figure arrived even higher than that, hitting 5% (multiyear peak). The expected slowdown has not materialized, growth in q/q terms (1.2%) was similar to those in Q1 (1.3%) and Q2 (1.1%). Q3 growth was supported by market-based services to the greatest extent, similarly to the first half of the year. Detailed data on the structure of growth will be released by the CSO on December 5. What is known in advance, that most segments of the economy had a positive contribution to growth. Also, within market-based services tourism delivered an ongoing outstanding performance. The contribution of agriculture and construction was also above-average. Broad-based growth was supported by strong domestic demand and extending consumption by households, an outstanding driver of which is still represented by high wage growth. The role of European growth was probably lower-than-expected, especially given the dynamics of the German economy (1.1%) being below the market consensus and the preceding quarter s growth. At the same time Hungary s regional peers also showed growth rates close to or above 4% and the

3 Romanian (4.3%), the Slovakian (4.6%) and the Polish (5.1%) growth rates came also well above the market consensus, similar to that of Hungary.Given the revisions of the preceding quarters growth rates (to 4.5% in Q1 and 4.9% in Q2), in 2018 we may expect the annual growth rate to arrive higher than projected earlier, reaching or exceeding %. We are going to publish further information on the revision of our growth forecasts following the CSO s publication of the final and detailed Q3 GDP data. Source: CSO, NBH HUF weakens slightly without any clear trend The forint's exchange rate against the euro fluctuated with slightly bigger swings in mid-november compared to the beginning of the month, but the trading range remained relatively narrow. By the time of closing our research report, the EUR/HUF cross rate returned to the levels, which is barely noticeably weaker rate than the one we saw a week earlier. After the weakening of the first half of the week, the appreciation had already begun ahead of the release of the better-than-expected GDP data. The range that has been characteristic of the bulk of the last three months still remained unthreatened. The USD/HUF cross rate followed a similar weekly course, moving near 284 on Friday morning. In the government securities market there was some correction of the 3Y and longer maturities compared to the yield-peaks at the beginning of the week, while the shortend of the yield curve remained stable. The 10Y yield spread versus the German curve continued to exceed 320bps.

4 CE3 GOVERNMENT BOND YIELDS HU PL CZ EU SPOT (bid) yield (%) spread (bp) yield (%) spread (bp) yield (%) spread (bp) yield (%) 1Y 0, , , ,67 3Y 1, , , ,54 5Y 3, , , ,22 10Y 3, , , ,37 60-DAY AVG yield (%) spread (bp) yield (%) spread (bp) yield (%) spread (bp) yield (%) 1Y 0, , , ,63 3Y 1, , , ,47 5Y 3, , , ,17 10Y 3, , , ,44 Source: Reuters

5 Maroeconomic and market forecasts Unit GDP growth, y/y - CIB forecast GDP growth, y/y - Market consensus Industrial production, y/y Trade balance % 2,0 4,0 4,6 3,2 % - 3,8 4,3 3,2 % 0,9 4,8 4,7 4,9 EUR mln CPI, y/y, average CPI, y/y, average - CIB forecast % 0,4 2,4 2,9 3,5 - Market consensus % - - 2,9 3,2 CPI, y/y, end of period - CIB forecast % 1,8 2,1 3,9 2,8 CPI, y/y, end of period - Market consensus % Budget balance / GDP (ESA, including one-off revenues) % -1,7-2,0-2,3-2,4 EXCHANGE RATES, END OF PERIOD (eop) EUR/HUF CHF/HUF USD/HUF EUR/CHF 1,16 1,19 1,19 1,20 EUR/USD 1,17 1,19 1,22 1,23 GBP/USD 1,32 1,27 1,30 1,32 GBP/HUF EXCHANGE RATES, QUARTERLY AVERAGE 2018 Q Q Q Q4 EUR/HUF CHF/HUF USD/HUF EUR/CHF 1,17 1,19 1,19 1,20 EUR/USD 1,18 1,18 1,22 1,23 GBP/USD 1,36 1,27 1,30 1,32 GBP/HUF INTEREST RATE FORECASTS (eop) NHB base rate 0,90% 0,90% 0,90% 0,90% HU 3M BUBOR 0,26% 0,25% 0,40% 0,54% Fed Funds rate 2,00% 2,50% 2,75% 3,00% ECB refi rate 0,00% 0,00% 0,00% 0,25% SNB 3M Libor target -0,75% -0,75% -0,75% -0,75%

6 Macro diary Week 47 MONDAY 11/19/2018 No major data release Country Time TUESDAY 11/20/2018 Data Period Previous Forecast Result HU 14:00 NBH rate decision: base rate November 0,90% 0,90% HU 14:00 NBH rate decision: O/N depo rate November -0,15% -0,15% US 14:30 Housing starts, mln unit October 1,201 1,230 US 14:30 Building permits, mln unit October 1,241 1,260 Country Time WEDNESDAY 11/21/2018 Data Period Previous Forecast Result US 14:30 Durable goods orders, m/m October 0,7% -2,1% US 14:30 Initial jobless claims, thousands weekly 216 US 16:00 Existing home sales, mln unit October 5,15 5,20 US 16:00 Leading index October 0,5% 0,1% US 16:00 UM consumer confidence index, final November 98,3 98,3 AUCTIONS Amount Previous Forecast Result HU 11:30 3M T-bill HUF 30 bln -0,06% THURSDAY 11/22/2018 HU 9:00 Gross wages, y/y September 10,1% EZ 16:00 Consumer confidence index, advance November -2,7-3,0 AUCTIONS Amount Previous Forecast Result HU 11:30 3Y bonf HUF 20 bln 1,64% HU 11:30 5Y bond HUF 20 bln 3,04% HU 11:30 10Y bond HUF 15 bln 3,63% FRIDAY 11/23/2018 DE 8:00 GDP growth rate, q/q, final Q3-0,2% -0,2% EZ 10:00 Manufacturing PMI, flash November 52,0 51,7 EZ 10:00 Services PMI, flash November 53,7 53,5 EZ 10:00 Composite PMI, flash November 53,1 52,9 US 15:45 Manufacturing PMI, flash November 55,7 55,9 US 15:45 Services PMI, flash November 54,8 55,0 US 15:45 Composite PMI, flash November 54,9 HU 18:00-24:00 Moody's rating on Hungary Baa3 Baa3

7 Week 46 MONDAY 11/12/2018 No major data releases TUESDAY 11/13/2018 DE 8:00 HICP, y/y, final October 2,4% 2,4% 2,4% HU 9:00 IP, y/y, final September 1,5% 1,5% 2,2% DE 11:00 ZEW index November -24, ,1 AUCTIONS Amount Previous Forecast Result HU 11:30 3M T-bill HUF 30 bln -0,07% -0,06% WEDNESDAY 11/14/2018 DE 8:00 GDP growth rate, q/q, preliminary Q3 0,5% -0,1% -0,2% RO 8:00 GDP growth rate, y/y, preliminary Q3 4,1% 3,3% 4,3% CZ 9:00 GDP growth rate, y/y, preliminary Q3 2,4% 2,6% 2,3% HU 9:00 GDP growth rate, y/y, preliminary Q3 4,8% 4,3% 4,8% SK 9:00 GDP growth rate, y/y, preliminary Q3 4,2% 3,9% 4,6% PL 10:00 GDP growth rate, y/y, preliminary Q3 5,1% 4,7% 5,1% EZ 11:00 GDP growth rate, q/q, preliminary Q3 0,2% 0,2% 0,2% EZ 11:00 IP, m/m September 1,1% -0,3% -0,4% US 14:30 CPI, m/m October 0,1% 0,3% 0,3% US 14:30 Core CPI, m/m October 0,1% 0,2% 0,2% THURSDAY 11/15/2018 US 14:30 NY Fed manufacturing index November 21,1 20,5 23,3 US 14:30 Import prices, m/m October 0,2% 0,2% 0,5% US 14:30 Initial jobless claims, thousands weekly US 14:30 Philly Fed index November 22,2 20,9 12,9 US 14:30 Retail sales, m/m October -0,1% 0,4% 0,8% US 14:30 Retail sales, ex-autos, m/m October -0,1% 0,5% 0,7% AUCTIONS Amount Previous Forecast Result HU 11:30 12M T-bill HUF 30 bln 0,29% 0,36% FRIDAY 11/16/2018 EZ 11:00 HICP, y/y, final October 2,3% 2,3% 2,2% EZ 11:00 Core HICP, y/y, final October 1,3% 1,3% 1,3% US 15:15 IP, m/m October 0,3% 0,2% US 15:15 Capacity utilization October 78,1% 78,1%

8 Contacts Resarch Sales Equity Sales FI, FX Mariann Trippon Head of Research Sándor Jobbágy Senior analyst Balázs Borók Balázs Pápay Balázs Tóth Zsolt Márvány Head of Treasury sales Sándor Fenyvesi FI sales Zoltán Verzár FI sales Mária Juhász FX sales Péter Kelemen FX sales Gábor Horváth FX sales THIS DOCUMENT IS NOT A PROSPECTUS, AN OFFER OR AN INVITATION TO BUY OR SELL ANY SECURITIES UNDER HUNGARIAN OR FOREIGN LAW. THIS DOCUMENT IS BEING FURNISHED TO YOU SOLELY FOR YOUR INFORMATION AND MAY NOT BE REPRODUCED OR REDISTRIBUTED TO ANY OTHER PERSON. NEITHER THIS DOCUMENT NOR ANY COPY OF IT MAY BE PUBLISHED IN THE PRESS OR ANY OTHER MEDIA.ANY INVESTMENT DECISION WITH RESPECT TO ANY SECURITIES OF THE RESPECTIVE COMPANY MUST BE MADE ON THE BASIS OF AN OFFERING CIRCULAR OR PROSPECTUS APPROVED BY SUCH COMPANY AND NOT ON THE BASIS OF THIS DOCUMENT. THIS DOCUMENT HAS BEEN PREPARED USING SOURCES BELIEVED TO BE RELIABLE AND ACCURATE. AS THE INFORMATION CONTAINED IN THIS REPORT HAS NOT BEEN INDEPENDENTLY VERIFIED, NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED IS MADE AS TO THE FAIRNESS ACCURACY OR COMPLETENESS OF THE INFORMATION AND OPINIONS CONTAINED IN THIS DOCUMENT. THE INFORMATION AND OPINIONS IN THIS REPORT ARE SUBJECT TO CHANGE WITHOUT NOTICE. ANY OPINIONS AND PROJECTIONS CONTAINED IN THIS DOCUMENT ARE ENTIRELY THOSE OF THE AUTHORS. NEITHER THE RESPECTIVE COMPANY, CIB BANK CLOSELY-HELD CORPORATION, NOR ANY OTHER PERSON ACCEPTS ANY LIABILITY WHATSOEVER FOR ANY LOSS HOWSOEVER ARISING FROM ANY USE OF THIS DOCUMENT OR ITS CONTENTS OR OTHERWISE ARISING IN CONNECTION THEREWITH.