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Hungary: GKI predicts economic recovery

By the end of 2008, the Hungarian economy will have started to recover and resume growth, with real wages rising slightly this year, states the latest monthly prognosis of the economic research institute GKI Zrt.

The industry continues to be export oriented, with its main driving force being the production of electric machinery, electronics and motor vehicles. Domestic sales of the manufacturing industry decreased. However, GKI expects industrial exports to slow down during the year. On the other hand, the decline in the domestic sales of industry will come to a halt – both in investment and consumer goods. A significant increase is expected from the expansion of EU supported investments in infrastructure in H2 2008.

Economic growth rate will probably be lower than in the other new member countries on average, reaching 2.5% to 3% (as against the 1.3% last year), but without agriculture and public services, growth rate might be between 3% and 3.5%. Annual inflation will be 6% to 6.5%, reaching a year-end value of about 5%. However, food and household energy prices might see an over 10% spike. GKI expects the gross wage rise in the private sector to stay over the 5% to 7.5% proposed by the national interest reconciliation council (OÉT). Real wages will probably be 0.5% to 1% up, but in the budget sector they will stagnate. The real value of pensions will grow by 1%, forecasts GKI. (Napi Gazdaság)