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Analysts say 2009 budget deficit target achievable, GDP projection optimistic

The 2009 budget approved by the government is realistic: the 3.2%-of-GDP ESA'95 deficit target is achievable, though the 3% GDP growth projection is optimistic, analysts told MTI.

CIB Bank chief analyst Mariann Trippon said the 3.2%-of-GDP deficit target is achievable, but it will be far from as easy as it was this year, when the government started with a target of 4.1% of GDP, but the deficit could narrow as far as 3.6%-3.7% by year-end.

Among the risks Trippon noted the government's 3% GDP growth projection for 2008. There are strong downward risks to this projection, especially in light of stagnating domestic demand - as seen by a more than 2% decline in January-July retail sales in figures published Wednesday morning - and considering the slowdown or stagnation on Hungary's biggest export markets, she said.

Her outlook for investments was also pessimistic because of uncertainty on the market and the higher cost of financing as a result of the global financial crisis, but she said the government inflation projection of 4.3% for 2009 was realistic, as long as oil prices remain around $100 per barrel and food prices are contained. The projection is far more realistic than the 2008 forecast of 4.5% was, when average annual CPI could reach 6.5% in 2008, she added, noting that CIB expects 2009 inflation as low as 3.9%.

Erste Bank's Orsolya Nyeste said the deficit target in the budget was realistic, but will be more difficult to achieve than this year, noting that potential reserves in the 2009 budget are smaller than in the 2008 budget. (MTI – Econews)