Ecostat, the research arm of Hungary's Central Statistical Office (KSH), said it lowered its projection for 2009 GDP growth to 0.6% from 1.3%.
Ecostat projects GDP growth of 1.8% in 2008.
In spite of the lower growth projection for 2009, Ecostat said a €20 billion credit line from the IMF, EU and World Bank, as well as a continued tight fiscal policy could put Hungary's economy on a sustainable growth path. Hungary's economy as well as its society has reached a turning point, it added.
Ecostat projects export growth will slow to 11.2% in 2008 and to 4.1% in 2009. It sees import growth of 10.1% in 2008 and 4.1% in 2009.
Ecostat forecasts household consumption will inch up 0.4% in 2008, but decline by 0.8% in 2009 as the cost of borrowing rises.
It projects investments will fall 2% in 2008 and 0.5% in 2009.
Falling demand on Hungary's main export markets is expected to hurt the chances for growth in the industrial sector, and farm sector growth will slow because of a high base. The outlook for the service sector has worsened because of falling demand by consumers as well as the state.
Ecostat sees the central bank leaving rates on hold until next year. It projects a base rate of 8.50% - down from the current 11.50% - by the end of the 2009.
It sees the accrual-based general government deficit narrowing to 3.4% of GDP in 2008 and to 2.5% in 2009. (MTI – Econews)