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GKI forecasts more growth, less deficit than government

Average twelve-month inflation is expected to rise from 3.9% to 5.8% next year but would drop to 4% by the end of 2007. The researchers expect Hungary's ESA95 general government deficit to drop from 9.5% of GDP this year to 6% in 2007, both less than the official 2006 forecast of 10.1% and next year's 6.8% target. GKI projects industrial output to grow at 7% this year and 6% in 2007. They forecast investment growth of 5% this year and 6% next year. The researchers project the central bank base rate to rise to 8% by the end of 2006 (from 7.75% at present). Vértes said they assumed a stabilization of the political situation, the execution of the fiscal adjustment and the launch of major reforms when preparing their forecast. (Mti-Eco)