Lower budget gap, growing purchasing power
Monday, June 6, 2005, 00:00
Hungary?s national economy is growing at a slightly slower pace than last year, a survey by research institute GKI Rt and Erste Bank concluded.
After the 4.1% economic growth in Q4 2004, this year saw 2.9% growth in Q1; meanwhile GDP growth in the Euro zone dropped from 1.5% to 1.3%. GKI forecasts 3.5% GDP growth year-on-year in 2005.
According to the researchers, Hungary?s budget deficit will total Ft 1,160 billion at the end of the year, which is below last year?s but over the target. While the rate of inflation is currently stagnating after considerable fluctuation early this year, GKI expects consumer prices to increase by 3.8% from 2004 to 2005, and forecasts a further cut in the benchmark interest rate.
As regards unemployment, the survey projects a decreasing jobless rate, however the end-of-year figure will probably exceed last year?s 6.1%. According to the GKI report, a 6.5% unemployment rate is most likely, which is still better than the EU average.
Real wages are expected to grow at a dynamic rate of 5%, and households? savings are also forecast to increase much faster than before, GKI said.