During the first quarter of the year, thanks to fair winds both at home and abroad, economic growth continued and even accelerated in Hungary. Internal equilibrium turned out to be better than expected. Exports and imports still show robust expansion with a first-quarter rate that might top even 6%. Although rising global energy prices led to higher foreign trade deficit, investment and tourism-generated revenues restored the balance. The growth of free zone exports continues to be dynamic. The employment rate has improved while the jobless rate further decreased. Hungarian exports are less and less dependent on the Western European economic boom as products manufactured in the local units of multi-national companies already make up a substantial part of it. These companies are even able to ignore fluctuating exchange rates and changes in demand to some degree. Export sales on the other hand are dominated by only a few product groups – especially machine industry products -, while the supply side of food products is still a long shot from what could be considered optimal.
The first quarter did not bring about a comforting decline in the rate of inflation. The economy is still haunted by a potential, well-above-planned inflation rate that could halt growth and upset the country’s economic equilibrium. The top 100 businesses are optimistic regarding production growth and companies in general expect to see a continued pickup in demand on both domestic and foreign markets. Improving sales conditions are likely to have a positive impact on their inventories and the utilization of their production capacities. At the same time businesses are somewhat more reluctant to talk about the consumer price index, yet most of them still consider a 2% cut over last year’s rate probable. Only a minority of CEOs expect the country’s economic situation to deteriorate. –
