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GKI predicts 2.5% GDP growth this year

Economic research institute GKI lowered its projection for GDP growth in 2011 to 2.5% in its latest forecast presented from the 2.7% projection in December.

GKI's projection is under the government's forecast of 3%.

The acceleration in GDP growth will come almost entirely from the farm sector, which suffered bad weather last year, said GKI head András Vértes.

Hungary's economy grew by 1.2% in 2010

GKI raised its projection for average annual inflation in 2011 to 4.2% from 3.8%, over the government's projection of 3.5%. GKI put year-on-year CPI in December around 4%.

Hungary's general government is expected to run a surplus of 2.5% of GDP, calculated with EU methodology, in 2011. Excluding the effect of the transfer of assets from private pension fund members returning to the state pension pillar, the general government would have a deficit of 6.5% of GDP, Vértes said.

GKI sees the unemployment rate staying around last year's 11.2% in 2011. It expects the employment rate to edge up 0.5%.

Gross wages are set to rise 3.5% and real wages by 2% in 2011, GKI said. Real wages will climb 2.5% in the business sector and by about 1% in the public sector.