New macroeconomic projections in the National Bank of Hungary's fresh quarterly Inflation Report, published on Wednesday, were prepared together with experts from the Finance Ministry, the International Monetary Fund (IMF) and the European Commission, said NBH director Ágnes Csermely at a press conference on Wednesday.
“The representatives of the international organisations and Hungarian officials discussed the trends, especially on how households react to government austerity measures, based on international experience,” Csermely said.
Hungary's biggest export markets are expected to contract 11.3% in 2009, but just 0.3% in 2010, said NBH analysts András Mihály Kovács. Hungary's economy is likely to suffer more than the average in Europe, because the external downturn will compound the effects of the credit crunch and government austerity measures, he added.
The NBH projects additional austerity measures recently announced by the government will cut state expenditures by HUF 336 billion in 2009 and by HUF 854 billion in 2010. But the government can only achieve its deficit target of 3.8% of GDP in 2010 if it takes further austerity measures affecting the equivalent of 0.7% of GDP, Kovács said.
The government's tax package for 2010 involves a restructuring: while the personal income tax burden will fall by HUF 250 billion and payroll tax will drop HUF 300 billion, the main VAT rate will be raised to 25% from 20% and the excise tax will climb 8-10% while the exemptions on extra-wage payments narrow, Kovács said. (MTI-ECONEWS)