Ecostat sees Hungary’s economy contracting 2.4% in 2009, compared to a contraction of 1.3%-1.5% forecast in December, the latest projection by the research arm of the Central Statistical Office (KSH) shows.
Ecostat sees investments falling 3.2%, exports dropping 4.5% and imports declining 5.9% in 2009. The forint could trade around 300 to the euro in the first half of the year, though an improvement in external financial conditions could cause it to firm HUF 20 – HUF 30 by year-end, Ecostat said.
Ecostat put the central bank base rate around 8% in June, down from the current rate of 9.50%. The central bank (MNB) will continue its campaign of rate cuts in spite of the weaker forint because demand for the currency is currently not determined by the interest premium, Ecostat noted.
Based on consultations with experts, Ecostat projects the biggest fall in export demand for the machinery, electric equipment and automotive sectors. The drop in exports will cause the trade balance to deteriorate by about HUF 880 billion in 2009.
Segments in which exports are expected to drop by the most are the segments working with the highest import share, meaning that, together with dropping domestic demand, Hungary’s trade balance could still improve this year. (Gazdasági Rádió)