GKI forecast on the 2009 processes of the Hungarian economy

According to the forecast of GKI Economic Research Ltd. and Erste Bank, the nadir of the recession is expected in the second-third quarter of this year. However, the improvements will not be as fast as the decline was.

The datas of the first quarter are worse than it was expected, however the panic has been eased on the markets. The confidence indexes in the EU and Hungary as well still show a level of pessimism, but a little improvement has been detected. While the performance of the Hungarian economy this year decreases about 5.5 percent, a spectacular improvement can be seen in the external balance. The internal balance is in accordance with the international requirements. The foreign trade balance has a significant 0.6 billion euros increase in the first quarter. The expanding trade surplus will grow due to the higher decline in imports than the decline in exports. In the middle of the year, the increasing of VAT and of excise duty will bring a temporary acceleration in inflation. That will be a  2-3 percentage point increase in the food price index. Decreasing demand however will decrease the price increases as well. Overall, due to the the mid-year impact of tax increases for the end of the year, a temporary rise in prices will result in a 7 percent rate of prices. The average annual inflation is expected for 4.5 percent.