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GKI reconfirms 2011 GDP growth forecast of 2.5%

Hungarian economic research company GKI again reconfirmed its 2011 GDP growth forecast of 2.5%, the company announced on Sunday.

GKI originally issued the 2.5% 2011 GDP growth forecast in March.

GKI's forecast is slightly lower than the National Bank of Hungary's projected 2011 GDP growth of 2.6% announced on Friday and the National Economy Ministry's projected 2011 GDP growth of 3.1% announced in April.

GKI predicted that Hungary's industrial output would rise 9% this year, less than the 11% growth it forecast in April. GKI noted that Hungary's 2011 GDP growth will stem partially from rising production in the agricultural sector stemming from better weather. The only dynamic sector will be the manufacturing sector, thanks to foreign car industry investments.

The company forecast an 18% rise in imports and a slightly lower: 17% rise in exports this year.

The company predicted that investment volume would rise 1% this year after contracting in each of the past two years.

GKI forecast an average unemployment rate of 10.7% this year.

The company predicted a 4.0% rise in gross wages in 2011 stemming from a 4.5% increase in gross wages in the private sector and a 2.5% rise in gross wages in the public sector. Real wages will rise 2.5% and real household income will rise about 2%, taking into account the payment of real yields for the former members of private pension funds.

Purchased consumption will rise, however, only 1.5% due to high debt service of loans for many household and an increased propensity to save.

GKI expects little inclination for households to borrow and for banks to lend this year. The saving ratio could stay unchanged at about 4.6%.

GKI predicted average inflation of 4.2% this year.

GKI predicted that the National Bank of Hungary will keep the base rate unchanged at 6% throughout the current year.

GKI's forecast 2010 GDP growth of 1% issued in July of last year compared to actual unadjusted 2010 GDP growth of 1.2% and calendar-year-adjusted 2010 GDP growth of 1.1%.