Slow growth, stubbornly high inflation

Hungary's internal and external balances are expected to improve on expectations this year.

According to the latest report by think-tank GKI and Erste bank published the government deficit to shrink to 6 percent of gross domestic product by the end of the year. The foreign balance is also expected to improve significantly. The foreign trade deficit in the first three quarters will contract to 0.4 billion euros from 2 billion in the same period last year.
The rate of inflation has picked up since summer last year and the high point was in the spring of this year. While it has moderated since, the rate of decline has slowed down mainly owing to the high price of oil on international markets and high farm prices, the GKI report noted.
Compared to September, October saw the tempo of price rises quicken – mainly due to higher petrol prices and no change in this area is expected in the rest of the year. Full-year average inflation is likely to stand at 7.9 percent, said GKI.
Gross average incomes are expected to have risen 8.5 percent for the full year, net wages however declined a statistical 4.5 percent, while, taking into account the effects of whitening the economy, combined public and private sector wages will have lost 6 percent of their value.