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Hungary: GKI forecasts improvements

In 2008 both domestic and external budget balances will be considerably improved; real wages in the business sector have already started to grow; at the same time inflation and the forint base rate continue to be high, forecasts the economic research institute GKI Zrt in its most recent prognosis.

The annual budget deficit is likely to be 3.8% of GDP, lower than planned in the budget law (4%). Indeed, it might possibly reach 3.6%, the level at which, if calculated with pension fund adjustment, the excessive deficit procedure is cancelled, says the prognosis.

Over 40% of the balance adjustment carried out so far comes from increased public duties (20% wage and 20% material expenses), and 15% from curbing investments.

Foreign trade balance is expected to see further improvement. The annual current account deficit will likely come to €3.5 billion, 3.2% of GDP, as against 4% in 2007.

Inflation, expected at 6.5% in 2008 and 5.5% at the end of the year, is mainly fueled by global prices, rather than the adjustment program, say GKI experts. (Napi Gazdaság)