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Bottom hit in Hungary according to GKI - "No more deterioration"

HungaryPosted by Chambers of Commerce Sweden - Southeast Europe Sat, October 24, 2009 16:50:46

According to the forecast of GKI Economic Research Co. prepared in co-operation with Erste Bank, the Hungarian economy hit bottom of recession as of Autumn 2009, and slight growth is expected in the fourth quarter. 2009 will see a 6-7 per cent drop of GDP and stagnation is expected in 2010.

External disequilibria are improving markedly, and internal ones are likely to be in line with international requirements. In 2009 Hungary will not need net external financing (because the loans taken will be used either to lift foreign exchange reserves or to repay loans borrowed earlier). Hungary's net external debt is set to decrease markedly in 2010. The general government deficit relative to GDP compares favourably with European countries already this year and next year it may prove to be one of the lowest ones.

In 2010 the development of the Hungarian economy depends mostly on the evolution of the global crisis, consolidation and recovery trends. Certainly, the economy is and will be influenced by the economic policy of the present government aiming at reducing deficits and enhancing credibility, as well as by the so far unknown economic policy of the new one to be inaugurated after the parliamentary elections. Since money markets signalled that foreign investors expect declining public foreign debt ratios and thus they are willing to finance limited deficits, there will not be much room of manoeuvring for another sustainable economic policy as far as the main macroeconomic trends are concerned, whereas the new government will have endless opportunities to change the details. Read more here.

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