2008 – Slowly Quicken in Hungarian Economy

Next year Hungary's internal and external balances to improve, while real wages may begin to increase.

A report jointly published by economic research institute GKI and Erste Bank is projecting 3.5% economic growth for Hungary in 2008 – a considerable improvement on this year's 1.7%, which was partly due to exceptional reasons. While GDP growth is expected to accelerate significantly compared with the 2007 rate, Hungary will most likely continue to lag behind the region's other countries, GKI emphasized. The expected 2008 growth is partly due to predictable recovery from the 10%-15% farming industry slump in 2007, which will be inevitably followed by 10% growth in 2008 even if weather is no better than average. GKI believes GDP in the community services sector will continue to decline, although at a slower pace than last year. The projected growth rate of core sectors (i.e. those not including agriculture and public services) is nearly 5% next year as opposed to 3% in 2007.
Due to the slowdown of economic boom in the EU, the growth rate of Hungary's industrial output is expected to decrease to 8% next year, yet industrial exports are likely to remain the engine of economic growth. The construction industry is predicted to experience a quick recovery, while the growth of domestic tourism, transit freight and business services is likely to remain high. Combined with infinitesimal growth in retail sales, these factors will cause Hungary's national product to increase by approximately 3.5%, GKI argues.