Growth accelerating this year

According to a forecast by GKI Gazdaságkutató Zrt. and Erste Bank, growth is expected to accelerate substantially in 2008, compared to the previous year. Both the external and internal balance are expected to improve and real income will also show some growth. The combined performance of the sectors excluding public services and agriculture will grow by 3 per cent this year and by 5 per cent next year. Industrial production will grow by 8 per cent in 2008 and export will remain the driving force behind growth. The retail sector is also expected to achieve minimal growth. GDP is expected to rise by 3.5 per cent. Export continues to expand dynamically and import is growing almost equally rapidly. The deficit of the balance of current payments will remain around EUR 5 billion. As a result of EU subsidies, the external financing requirement will be reduced to EUR 3.2 billion, which accounts for 2.9 per cent of the GDP. Inflation is expected to slow down from 7 per cent to 4 per cent in 2008. Food prices will rise by about 10 per cent this year as well. Fuel prices are not expected to go up significantly. The rise in nominal incomes will slow down and the “whitening” of the economy will continue. Gross incomes will grow by 7.5 per cent in the competitive sector and by 6.5-7 per cent in the public sector. Real income will be up by one per cent.