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IMF projects Hungary’s economy will grow 0.3% in 2012

MNB

The International Monetary Fund projects Hungary’s economy will grow 0.3% in 2012 and 1.5% in 2013, an annual country report published on Wednesday.

The IMF projects Hungary’s fiscal deficit as a percentage of GDP will exceed 3% in both 2012 and 2013.

A last-minute addition attached to the report by the IMF staff on January 13 puts the general government deficit at 3.9% of GDP this year and at 4.l% in 2013.

The deficit ratio projections were raised by 0.4 percentage point for both years compared to the December version of the report. The main reason for the higher deficit projections were the costs of an agreement struck with banks on FX mortgage repayments and the cost of wage compensation to ensure no Hungarians are left worse off by recent tax changes.

The IMF projects state debt will drop to 75.5% of GDP by the end of 2011 from an estimated 77.7% at the end of 2011. The debt ratio is set to drop slightly further to 75.1% in 2013.

The report projects annual average inflation will rise to 5% in 2012 (from 3.9% in 2011) before dropping to 3.7% in 2013.

It forecast a jobless rate of 11.5% in 2012 and slight drop to 11.1% in 2013.

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