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MKB ups GDP projection as low inflation pushes real wages higher

Analysis

Hungary's MKB bank has made an upward revision of its projection for consumption and GDP as a result of a rise in real wages stemming from unexpectedly low inflation, the bank told MTI on Thursday. They now project GDP growth of 0.2% this year instead of a 0.1% contraction based on improved outlook for consumption and for the construction sector. MKB, a unit of Bayerische Landesbank, reduced its forecast for the 2013 contraction of consumer spending to 0.5%, and expects consumption to increase in a quarterly comparison starting with the second quarter. Disposable income is expected to rise 1.5%-2.0%, as social support and pensions rose at a higher-than-expected 5% in nominal terms in Q1 and the higher pace could prevail in the remainder of the year. Households would save most of the increase but would also raise consumption, MKB forecast.

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