GKI Lowers 2008 GDP Growth Projection to 2.0 pct

Economic think tank GKI has lowered its forecast for Hungary's GDP growth to 2.0 pct from 2.7 pct for 2008, and to 0.5 pct from 3 pct for 2009, the think tank announced on October 26th 2008.


According to the projection the Hungarian economy will likely diverge from the path outlined in the country's convergence program in 2008 and 2009 as the entire EU is put on a recession track. Though economic growth will practically stagnate and unemployment will grow, Hungary's external and internal balance will improve as retail and corporate savings grow and the net financing requirement of the budget is reduced.

GKI put the forint around 260 to the euro by year-end, and it sees it strengthening further in 2009, if financial markets stabilize. The National Bank of Hungary could lower its key rate - raised in an extraordinary move by a sharp 300bp to 11.50 pct on October 22nd - to 6-7 pct by end-2009.






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