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Ecostat puts 2009 GDP growth at 3.2% - extended

Ecostat, the research arm of Hungary’s Central Statistics Office (KSH), projects Hungary’s economy will expand 3.2% in 2009, well under the 4.0% government forecast in the updated convergence program.

In its latest projection, published Wednesday, Ecostat puts GDP growth in 2008 at 2.5%, slightly over the government’s forecast of 2.4%. The government revised its 2008 GDP growth forecast a week earlier from 2.8% in the updated convergence program. Ecostat based its projection for 2008 GDP growth on last year’s growth trends, said Ecostat director Pál Belyó. Hungary’s economy grew 1.3% in 2007. The public sector contracted 7.3%, while the private sector expanded 4.7%. This year, Ecostat expects the public sector to stop contracting, but it still sees sluggish growth of 1.7% in Q1, 2.9% in Q2, 3.2% in Q3 and 3% in Q4.

Ecostat projects a 0.4% increase in household consumption and a 4.2% rise in investments for 2008. For 2009, Ecostat forecasts 5.1% investment growth. In its latest projection, Ecostat puts 2008 CPI at 6.0%. It sees inflation slowing to 3.9% in 2009. The government recently raised its projection for 2008 CPI from 4.8% to 5.9%. Ecostat projects gross wage growth of 7.6% in 2007, well over the government’s 6.3% projection, which was raised from 5.2% in the updated convergence program.

Ecostat forecasts a 3.9%-of-GDP general government deficit in 2008 and a 3.2%-of-GDP deficit in 2009. The projections are in line with the government’s forecasts of 4.0% and 3.2% for 2008 and 2009, respectively. Ecostat puts the trade surplus for both 2008 and 2009 between €100 million and €200 million, after a deficit of €308 million in 2007. It sees the current-account deficit falling to €5.3 billion in both 2008 and 2009 from €5.8 billion in 2007. Ecostat sees the central bank base rate at 7.50% at the end of 2008 as well as the end of 2009, level with the current rate. (MTI-Econews)