In the middle of a financial crisis

According to the latest forecast by GKI Zrt., the external conditions for growth are much worse this year than in preceding years. The financial crisis beginning as a mortgage crisis in the US is deeper and longer than previously expected. As a result of the coalition breaking up, the political situation in Hungary has become even more unstable than before. No specific new concepts have been outlined by the major political forces. However, a slow improvement has begun, with better balance and growth achieved than planned. Inflation is slowing down, interest rates are high, employment is stagnating, investment is low. While export had increased by 12 percent on average in the first four months, this slowed down to 0,8 percent in the next three months. The agricultural sector is doing extremely well, with growth of 25 percent expected in 2008. Stagnation is expected in the retail sector, with only 1 percent growth in consumption. Economic growth will accelerate slightly in 2009. Growth is expected to be 3 percent in 2009. Household consumption is expected to rise by 2,5 percent, while investments will be up by 10 percent, mainly as a result of financing from EU sources. Real incomes are to rise by 3 percent on average. Inflation is expected to average 4,2 percent in 2009. The prime lending rate will probably be down to around 6 percent by the end of 2009.