Growth of the world economy was bigger than expected in 2010 thanks to the dynamic growth of developing Asian economies that drags the developed countries’ economy too. However the short-term financial problems and budget adjustments exercised a negative impact on the general business sentiment, analysis of Századvég writes. Success of Széll Kálmán Plan depends on employment growth.
Consumption and investment data shows that domestic demand recovers slower than expected. Therefore the engine of growth in Hungary is still export. After household consumption increased in 2010 Q4, it dropped again by the end of the year. This could be due to temporary factor such as companies postponed the payment of bonuses for 2011 for the personal income tax changes.
The labor market slowly recovers from the shock of the crisis, while inflation rates are still influenced and kept higher in all countries by the price increase of commodities. Based on the expected dinamics of consumer prices maintaining strict monetary conditions is justified, Századvég concludes.
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