Macroeconomic Forecast Hungary

We hold to our view that Hungarian economic growth will come in at a weak 1.8% this year, followed by a lacklustre 3.4% outturn in 2009. One factor impacted by the poor economic outlook has been the unemployment rate, which climbed to a multi-year high of 7.7% in 2007 and remains there according to latest figures for April. On the back of this data, we have recently revised up our end-year 2008 unemployment forecast to 7.8%, from an original 7.2%. Any improvement in the joblessness situation will likely not occur until 2009 and even then we expect the pace of decreases to be limited. Indeed, we forecast the unemployment rate to remain above 7.0% until 2010 before falling to 6.0% by 2012.

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