Ecostat expects Hungary’s cash flow-based deficit to exceed Ft 1,800 billion by year-end, well over the government’s target of Ft 1,550 billion. Ecostat projects the cash flow-based deficit to reach 7.4% of GDP, compared to the government’s 6.6% target. Ecostat also expects an accrual-based deficit, corrected for the effects of pension reform, of at least 5.6% of GDP, compared to the government’s target of 4.7%. The current account deficit will be 7.7% of GDP, according to Ecostat.
Ecostat expects Hungary’s economy to expand 4.3% in 2006, compared to 4.1% in 2005. Growth will be driven by exports and investments, with household consumption rising at a rate under GDP growth. Ecostat expects final consumption to increase 2.9% in 2006, 1.2 percentage points more than in 2005. Household consumption is deemed to grow 3%, which corresponds to the growth of real wages. Public sector consumption is expected to increase 2.4% in 2006, more than in previous years. Annual average inflation will be 2.3% in 2006, according to Ecostat.
Ecostat expects exports, in euro terms, to increase 10.1% in 2006 and imports to rise 9.4%. In 2005, exports increased 11.4% and imports rose 8.3%. Ecostat based its projections calculating with a base rate of around 6%, and assumed balanced external conditions, a moderate weakening of the forint and no changes in budget expenditures.
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