Improving balance of the Hungarian economy

According to the forecast prepared by GKI Economic Research Co. in co-operation with Erste Bank the Hungarian economic policy adjustment is taking place in a favorable European business climate but amid growing global economic uncertainty.

This year the general government deficit will decline by about 3%
of GDP. About half of the improvement is due to rising revenues. The
other half is due to spending cuts, with reduced central and local
government investments and declined public service expenditures having
an approximately equal share. The external balance is also improving
significantly. The full trade surplus will approach 2 billion euros,
following a modest positive balance last year.
GDP growth will slow even more than expected, to about 2%.
Shrinking agricultural production alone will sap GDP growth by 0.5
percentage points, while the drop in public services by more than 1
percentage point. The production of the industry will grow by 8.5%.
Domestic tourism is rising dynamically, transit volume is expanding
rapidly. Business services are expanding strongly. Output of the
construction industry and the retail trade turnover will be down 2%.

Inflation started growing rapidly in the summer of 2006. It peaked
in spring 2007 at a higher level than originally forecast, and its
decline since the summer of 2007 is also more modest. There are several
reasons for that.