There will be more room for maneuver for tax cuts or social spending from the second half of 2008 and 2009, but only at around 1% of GDP, Gyurcsány said. Inflation, which is under temporary upward pressure from the tax hikes and utility price hikes, will return to around 3% once the budget has been set on a sustainable track, he said.
The government had earlier forecast GDP growth slowing to 2.5% next year after the fiscal cuts and analysts forecast 2.9% growth for next year. In 2005, Hungary’s economy grew at a rate of 4.3%, and growth is projected at 4.5% this year, according to figures of the Central Statistics Office (KSH).
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