The International Center for European Growth (ICEG) projects 4.5% GDP growth in Hungary in 2006, but the actual figure could be lower, depending on the effect of budget reforms.
The outlook for Hungarian economic growth is fundamentally positive, however, the fact that the number of employed is not increasing gives reason for caution, ICEG analyst Gábor Pellényi told a press conference in Budapest on Monday.
If the government fails to take steps to correct Hungary's fiscal balance, the general government deficit could reach 9% of GDP by year-end, or 7.8% of GDP including the effects of pension reform, ICEG director Pál Gáspár said. Even if steps are taken to improve fiscal balance, Hungary's level of state debt as a percentage of GDP will probably increase further to 63%-63.5% of GDP.
ICEG expects the forint to continue to trade around 265 to the euro for the remainder of the year, after slipping from 250 to the euro in the first quarter.