First-quarter macroeconomic trends and reports by all the Hungarian economic research institutes strongly suggest that growth will continue throughout the year. The trade and accounts balances and the general budget are likely to turn out as planned or even better. The majority of forecasters expect an annual economic growth of about 5% and concur with the government estimate of a 2 billion euro current accounts balance deficit. The influx of working capital and portfolio investments, however, provide ample cover to finance it. Forecasters’ opinions concerning domestic consumption are already more diverse, nevertheless all expect its growth around 3-4%, clearly lower than last year’s 4.5%. There is even greater disagreement as to the inflation rate – what seems to be certain in any case is that prices will go up more than the 6.5% consumer price index used by the Ministry of Finance at the time this year’s budget was planned.
The two main areas contributing for the bulk of economic development in 2000 will be growing exports and domestic consumption. Central demand-incentive measures have not only been widely publicized but are also set down as long-term programs within the framework of the so-called Széchenyi Plan. Still, in 2000 – as before – the majority of investments will be coming from liquid foreign companies. According to Ecostat the producer price index is likely to keep growing until May and will be going down from then on – reaching approximately 8.7% by September compared to the same period of the previous year. Industrial production will continue to rise dynamically, domestic sales are expected to increase 5%, foreign sales about 20% by the end of August. By September industrial production could be as much as 14% up. Retail trade growth will show similar trends – sales could be 8% higher by September than the year before.
The stock exchange index, however, is likely to drop further down in the short run. The slump of the BUX is primarily attributable to U.S. economic trends that are likely to have a continued impact on the index. In spite of that, in the long run, prompted by the promising economic outlook of the domestic economy, the index could reach 10700 points. –
