Deficit lower than planned

According to a forecast by GKI Gazdaságkutató Zrt and Erste Bank, both the internal and external balance of payments are expected to show significant improvement this year. Real incomes are already rising in the competitive sector, though inflation and interest rates are still high. The deficit of the budget in the first five months remained below 40 per cent of the total projected for the year. Foreign trade produced a positive balance of EUR 330 million in the first four months (unprecedented since 1990). The rate of inflation shows only very gradual reduction, with 6.9 per cent for the first five months. The deficit of the budget is expected to be 3.8 per cent this year, instead of the planned 4 per cent. The external balance of payments continues to improve, with an EUR 0.6 billion reduction in deficit and an EUR 0.6 billion increase in foreign investment. The average inflation rate for the year is expected to be reduced to 6.5 per cent, with inflation dropping to 5.5 per cent by the end of the year.