Hungary

RGE's Q1 2010 Hungary Outlook

Hungary’s economy will continue to lag behind regional peers in 2010. While the other CE-4 economies (the Czech Republic, Poland and Slovakia) are likely to post growth, Hungary is headed for another year of contraction. This underperformance trend is a familiar one. Since 2005, the country’s growth dynamics have consistently placed it at the back of the pack. Annual GDP growth averaged 3% in the 2005-2008 period, well below the 7%-plus growth rates posted by regional peers. In October 2008, as capital inflows dried up, Hungary averted a balance-of-payments crisis by securing a €20 billion IMF-led rescue package, but did not avert a deep recession.

The Hungarian economy contracted for six straight quarters through Q3 2009. The government estimates GDP fell 6.7% in 2009. RGE expects GDP will decline 1.0% in 2010, slightly below the government’s forecast of a 0.6% decline, due to anemic domestic demand, ongoing fiscal tightening and a weak export outlook. Risks to the forecast come from...

Read the Q1 2010 Hungary Outlook.