Hungary's main balance indicators will probably not improve before the parliamentary elections in April, research institute Ecostat said in its monthly report released on Wednesday.Ecostat said it was difficult to project which measures might be taken to balance Hungary's deficit after April elections and local elections in autumn. If, however, the new government fails to take effective and comprehensive measures, Hungary could fail to meet its 2010 target to join the eurozone, as well as receive a poor assessment. The central budget's financing requirement must be reduced, and not only because of external factors, Ecostat said, noting that the level of state debt, which increases year by year, carries with it increasing financial risks.
Ecostat said Hungary's monetary policy has been characterized by favorable inflation, a high level of liquidity, a worsening fiscal balance and a changing global environment. The report projects average annual inflation of around 2% in 2006 and foresees little risk of missing the target.
Ecostat expects industrial output to increase 7%-8% in 2006. It forecasts a 5%-6% rise in investments, depending on the situation of the central budget as well as market conditions.