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National Bank of Hungary lowers GDP, raises CPI projections for 2012

The National Bank of Hungary (MNB) has lowered its projection for GDP growth in 2012 from 1.5% to 1% and raised its projection for average annual inflation from 3.9% to 4.7%, the central bank said on Thursday.

The projections were changed from ones announced on Tuesday by MNB governor András Simor after a meeting of the Monetary Council. In line with the usual practice, Simor revealed the main projections in the central bank’s quarterly Inflation Report published two days later.

The new projections take into account the 2012 budget draft, the MNB said on Thursday.

The GDP growth and average annual inflation projections for 2011 remain unchanged at 1.6% and 3.9%, respectively, the central bank said.

The MNB sees the general government with an accrual-based surplus 1.9% of GDP in 2011, but it projects a deficit of 3.4% for 2012, under the 3.7% projected before taking into account the 2012 budget draft.

The projection is over the government's 2.5% target.

"The report assumed an exchange rate of 275 forints to the euro and calculates that the forint will stabilize after a course of tangible depreciation in the short term," MNB chief analyst Barnabas Virag said on Thursday.