Ecostat projects 4% GDP growth in 2006
Ecostat, the research arm of Hungary's Central Statistics Office (KSH), projects GDP growth of 4% in 2006, according to its latest monthly Microscope report published Tuesday.
Growth will be helped by growing investments and increasing exports. In the second half of the year, domestic consumption will decrease only slightly, as will real wages. Ecostat projects a cashflow-based general government deficit of Ft 2,000 billion in 2006, or 8.7% of expected GDP. Recently introduced austerity measures will result in savings of Ft 250 billion-Ft 300 billion in 2006, with savings related to some measures expected to flow in only next year. Ecostat projects an accrual-based deficit of 10.2% of GDP in 2006, excluding the effect of any corrections.
Ecostat says projections for 2007 are more difficult to make because of the unknown effect of the government's austerity measures. Still, it says domestic consumption will slow only slightly in 2007, rising 1.9%. Public consumption will increase 1%-1.5%, it says, and inflation will rise over 5%, well above the increase in factory gate prices. Hungary's economy will expand by 1-1.5 fewer percentage points in 2007, but growth will not fall under 3%. Growth will depend on the global economic climate as well as whether Hungary's exports continue to outpace imports. Hungary's current account deficit will improve, but could still exceed Ft 6 billion. Investments will increase 7%-8%, Ecostat said.
Ecostat points out that the government's austerity package, which aims to save Ft 1,000 billion, could backfire if it encourages tax evasion. Slower growth will also mean less tax revenue. Still, savings could amount to 2.5% of GDP in 2007, allowing an accrual-based deficit of 6.5%-7% of GDP.
SUPPORT THE BUDAPEST BUSINESS JOURNAL
Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.