EBRD improves growth outlook for Hungary.

By bne IntelliNews July 23, 2010
The EBRD raised its forecast for the economic growth in Hungary by 0.2pps to 1.2% y/y for 2010, according to the latest outlook report of the bank. Similarly, the projected GDP growth for 2011 was improved by the same margin to 2.3% y/y. EBRD pointed out that statistics data showed favourable signs for a recovery of industrial production and exports up till May. On the negative side, domestic demand had remained weak due to low demand for credit and a persistent increase in the unemployment rate. Overall, industrial activity was expected to slow down in H2, possibly due to a moderation of the low base effect from the previous year but nevertheless, the EBRD expected slight economic growth for 2010. It, however, warned on risks for the recovery of domestic demand in the planned introduction of a temporary financial sector tax since it could prevent a picking up of credit activity. In addition, the bank underlined the uncertainty, surrounding fiscal policy after the failure of the IMF talks as another negative factor for the markets.

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