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Varga: Gasoline price drop to boost 2015 GDP

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Despite speculation that the 2015 budget would lose HUF 80-90 bln if the price of crude oil falls under $70 per barrel, National Economy Minister Mihály Varga on January 1 told Hungarian news agency MTI that prices below $60 per barrel could increase sales and raise Hungary's 2015 GDP growth rate by as much as half of a percentage point above the government's official forecast of 2.5%.

An earlier report by Hungarian business daily Vilaggázdaság, that sales of gasoline and diesel increased year-on-year due to falling prices, would seem to support the minister's claim of positive effects from lower fuel prices.

According to Varga, due to the risks posed by the Ukranian crisis, the Hungarian government would review its forecast when submitting its updated convergence program to Brussels, and the updated plan has to be submitted to the European Union by the end of April.

Varga spoke with confidence about this year’s growth and said that general government processes will be in line with plans, as the negative effects of the Russian embargo were built in the 2015 budget, though he added that it is difficult to assess the impact as the embargo affect the various sectors of the economy differently.

According to the minister, the government targets an ESA deficit of 2.4% of GDP for 2015, and last year's general government deficit could be about 2.7% of GDP, below the 2.9% target. He reportedly added that the pace of inflation was reminiscent of the 1960s and that he was confident that state debt could be kept on a falling trend.

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