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MNB forecasts 0.2% GDP decline, 4.4% CPI for 2010

The National Bank of Hungary (MNB) forecasts Hungary's GDP to inch down 0.2% in 2010 and it puts average annual inflation for the year at 4.4%, the bank said on Monday, citing the main figures of its fresh quarterly inflation report to be published in full on Wednesday.

The MNB raised its 2010 average inflation projection compared to 3.9% in its November report, and now expects inflation to drop below the 3% midterm target only in Q1 next year instead of Q3 this year.

The new MNB inflation forecast is above the 4.1% annual average inflation projected by the government in the latest update of Hungary's convergence report sent to Brussels in January.

The MNB improved its GDP projection from a 0.6% decline foreseen in November. The projected 0.2% contraction is in line with the government's recently updated 2010 projection.

The forecasts for 2010 in the November inflation report were the same as the government's forecasts at the time.

As for 2011, the new inflation report projects GDP growth of 3.4%, as did the November report, and forecasts average annual inflation of 2.3%, revising the respective 1.9% upward.

The Bank's 2011 GDP growth forecast is lower than the 3.7% growth foreseen in the convergence plan update while next year's inflation forecast is the same as the government's.

In 2009, GDP fell by 6.3% according to preliminary Central Statistical Office figures, contracting less than the 6.7% decline forecast in the previous inflation Report. Annual inflation, at 4.2% came in at forecast. The forecasts in the November report for 2009 were in line with the government's projections. (MTI-Econews)