Uncertainty regarding the end of recession

According to a forecast by GKI Gazdaságkutató Zrt and Erste Bank, the end of the global recession and its extent is completely uncertain. GDP in the EU is expected to drop by 2 percent on average in 2009 and by even more in Hungary. Some improvement is expected in the second half of 2009, but this by no means certain. In 2009, Hungary is expected to cut the deficit of its budget to well below the level defined by the Maastricht criteria. Strict monitoring to be carried out by the IMF will also help in meeting these criteria. The external balance of payment also needs to be improved rapidly as foreign financing has become very expensive. This might come from boosting the surplus of foreign trade and an increase in EU subsidies. Hungarian GDP is expected to drop by 2.5 percent in 2009. Industrial production is expected to drop by 3 percent, but growth might be possible in the fourth quarter. Investment is to be limited as a result of a shortage of financing. Shrinking demand will lead to even more intense competition, which will in turn result in a growing number of bankruptcies and mergers, especially among smaller enterprises. Real income is expected to drop by one percent. Inflation will drop rapidly and is expected to average 2.8 percent in 2009. Consumption is expected to drop by more than the reduction in real income. Investment will continue to drop in 2009, falling to the level seen in 2004.