World Bank report: Hungary lags behind
Friday, February 17, 2006, 13:59
With huge budget and current account deficits, as well as growing foreign debts, Hungary's main economic indices were the worst among its major central and eastern European peers, national daily Magyar Hírlap said, quoting a recent World Bank report. The current account deficit is expected to be 7.9% of gross domestic product (GDP) this year, which is four times as high as Poland's and almost three times as high as Czech Republic's, said the report. The region's second highest current account deficit, in Slovenia, is expected to be over two percentage points lower at 5.6 %. Hungary first tackled welfare creation before developing the financial stability required for euro adoption, economist Ákos Bod Péter told the paper, commenting on the increase in gross foreign debt, which has reached 74.4 % of GDP. According to Bod, the other countries of the region acted more rationally and gave priority to establishing stability while Hungary lavished spending on its citizens, the paper said. Economic growth was 4.1% last year as against 4.6 % in 2004, the World Bank report said. Hungary went against international trends in recent years, as other emerging markets moved to reduce the current account deficit and foreign debt. As a result of the lax budget, confidence in forint assets is low and consequently the stock exchange index has not recently risen as much as in Poland. As a result, favourable international trends have not translated across to Hungary's monetary and capital markets, he added.