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GKI still projects 1.5% economic contraction

GKI is standing by its projection for a 1.5% economic contraction in Hungary this year, the research company said in its fresh forecast.

GKI said a decline in the farm sector would take a full percentage point off GDP this year. It added that layoffs at Finnish handset maker Nokia's base in Hungary and the grounding of national carrier Malév would also cause drag on the economy.

GKI projects household consumption will contract by 2.5%. 

It sees investments falling 4%.

GKI said it was unlikely Hungary would meet the 2.5%-of-GDP general government deficit target for 2012. Instead, it put the gap around 2.9%, citing pressure on the government to keep the deficit under 3%. GKI said measures adding up to HUF 200 billion-300 billion would be necessary during the year to shore up the gap.