External balance improving as well

According to the latest forecast prepared by GKI Gazdaságkutató Zrt. with the help of Erste Bank, both the external and internal balance of payments is expected to show substantial improvement. Inflation has already passed its peak and interest rates have begun to fall. Real incomes showed stagnation in the last quarter following a reduction of 4,5 per cent. The rate of growth is lower than last year, but higher than planned. As a result of expanding export, industrial production rose by 9 per cent. Retail turnover was 0,4 per cent lower in the first four months than in the same period last year. Sales of food also show decline. Exports grew by 18 per cent, while imports increased by 15 in the first four months. The deficit of foreign trade has disappeared. The deficit of current payments will be around EUR 4,5 billion. The average rate of inflation for the year is expected to be 7 per cent, but will only be 4,5-5 per cent at the end of the year. Wages in the private sector will rise by 8,5 per cent, while those in the public sector will show an increase of 6 per cent. Real income is expected to be reduced by 4,5 per cent by the end of the year, though they will not be lower after September than they had been a year before.