The brakes are on

According to a forecast by GKI Gazdaságkutató Zrt. published on 27. December 2006, inflation is rising but balance is starting to improve. Investor confidence and the HUF are both improving as well. The economy is slowing down compared to the first quarter of 2006, the rate of growth fell form 4,9 per cent in the first quarter to 3,8 per cent by the third quarter. Private consumption and investment are both slowing down, while exports are growing dynamically with imports expanding at a 5 per cent slower pace. Domestic consumption is growing slower than GDP. Tax increases and reduced subsidies have not had much effect on the economic processes so far. These are expected to appear in 2007. However, government spending has become much more disciplined. In 2006, growth was similar at 4,1 per cent to the previous year and was driven by exports. In the fourth quarter, restrictive measures began to limit the growth of domestic demand.