Report: Hungarian economy may have turned the corner

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The worst is probably behind for Hungary’s economy and recent data has shown marked improvement in terms of economic activity, although some of this improvement has come about via measures which have damaged the business environment, reported London-based Capital Economics analysts yesterday.

In a report released to clients, Capital Economics said its own GDP tracker indicator suggests that the economy may have grown by around 0.3% year-on-year in the second quarter. If correct, they surmised, “this would be Hungary’s fastest growth rate since the final quarter of 2011.”

Looking ahead, there are reasons to believe that “things will get better from here on. For a start, the latest survey data suggest that the German economy, the destination for Hungarian exports equivalent to 20% of GDP may now be on stronger footing.”

In summary, Capital noted the “raft” of good news regarding the Hungarian economy as of late and that data on GDP for the first quarter of 2013 “showed that the economy exited recession, the budget deficit has narrowed to the extent that the European Commission lifted the country out of its excessive deficit procedure, and the local financial markets withstood the recent sell-off in Emerging Market assets relatively unscathed…”

The words of caution from the analysts: “significant tail risks remain.”

In a separate report highlighting key findings of a recent visit to Budapest, London-based economists at JP Morgan said that the consensus forecast on Hungary’s 2013 GDP growth has moved higher in recent months, to 0.3% from -0.1% in March, following the first-quarter expansion.

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