Real incomes rising in competitive sector

According to a forecast by GKI Gazdaságkutató Zrt prepared with the cooperation of Erste Bank, data from the first quarter of the year seems to confirm expectations that economic growth will accelerate in the second half of 2008. The Hungarian economy produced growth of 0.9 per cent in the first quarter of 2008, compared to the same period in 2007. Industrial production and export show dynamic expansion, while recession in retail and the construction sector has slowed down. As a result of stabilisation in the sectors suffering the worst recession in 2007, economic growth is expected to be between 2.5-3 per cent for 2008, but will reach 3.5 per cent in the second half of 2008. Agriculture is expected to produce exceptional expansion, provided weather conditions remain average. The gradual increase in real incomes will have a positive effect on retail sales. Slow recovery is probable, even if the expansion of industrial production slows down. Economic growth is expected to be above the EU average, but below that of new member states. The deficit of the budget was significantly lower in the first four months of 2008, than previously expected. Average inflation in 2008 is expected to be 6-6.5 per cent. Wages in the competitive sector have been rising at a rate of 11 per cent, which is much higher than 5-7.5 per cent recommended by OÉT.