C/A Deficit To Narrow Marginally In 2008

We hold to our view that Hungary's current account deficit will continue to narrow in 2008, though high energy import prices and weakening external demand will mean the improvement will only be marginal. Indeed, our forecast calls for the deficit in percentage of GDP terms to decline by just 0.2pps to 4.8% this year, as compared to a 1.5pp contraction in 2007. Positively though, the level of non-debt creating financing has improved substantially in the first quarter, auguring well for the sustainability of the deficit.

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