Hungary's higher taxes hurt growth potential, IMF says
Hungary requires the most urgent fiscal consolidation of any emerging market country in Europe; however, the government's plans to reduce the fiscal deficit from this year's expected 10% of GDP by four percentage points in 2007 mainly through increased tax revenue could hurt the country's growth potential, the International Monetary Fund (IMF) said in a report published on Thursday.
In its World Economic Outlook, the IMF projects Hungary's GDP growth will slow from 4.5% in 2006 to 3.5% in 2007. It says inflation will pick up from 3.6% in 2006 to 5.8% in 2007. The IMF puts Hungary's current account deficit at 9.1% of GDP in 2006 and 8% in 2008. It blames the country's big current account deficit on government overspending rather than investment money which flowed in after Hungary joined the EU.
It also warns that Hungary's big external financing requirement puts it a greater risk because of the increased volatility of global markets. Meeting the Maastricht criteria to adopt the euro will require a disciplined and sustained fiscal policy, the IMF says. It adds that structural reforms are of key importance to improving economic flexibility and closing the productivity gap with the EU15.
ADVERTISEMENT
Mapei Targets 6% Higher Revenue This Year
Parliament Negates Mandatory Membership in MOK
Magyar Suzuki to Start Dual Training Courses
Budapest Leaders Unveil Plans to Scale Back Traffic on Thoro...
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.
