Economy is regaining strength, but international confidence is melting

According to a forecast by GKI Gazdaságkutató Zrt. and Erste Bank, economic growth in Hungary will be around 1 percent this year. In the 2nd quarter the Hungarian economy bettered its performance by 1 percent, in comparison with the same period in 2009. We were legging behind the EU average because despite our good export performance (capitalising on the upturn in Europe and especially in Germany) the sectors producing for the domestic market continued to suffer. Export grew by 17 percent in the first six months – but domestic sales declined by 5 percent. The fact that negotiations with the EU and the IMF were put to a halt in July significantly shook international confidence in the Hungarian economy. If international organisations and markets approve of the 2011 budget and the updated convergence programme, international confidence might start growing again.