Think-tank GKI continues to expect Hungarys economy to contract 1.5% in 2012.

By bne IntelliNews September 5, 2012
Economic think-tank GKI has confirmed its forecast for a 1.5% contraction of the Hungarian economy in 2012, according to its latest report published on its website. GKI has kept unchanged this projection since December 2011. Hungarys industrial production declined 0.4% y/y in H1 2012 as a 1% y/y increase in export sales was offset by a 1.7% y/y drop in domestic sales, GKI said. The export of the automotive industry grew by 10% y/y, which was due to the launch of Daimlers local plant. This however, could not counterweight falling external demand for the rest of Hungarys exports, GKI said. Retail trade turnover dropped by 1.1% y/y in H1, while the fall is projected to speed up to 2% y/y on H2 2012. The rate of unemployment will stagnate to about 10.8% at end-2012, up from 10.7% a year earlier. The think-tank noted that government needs to introduce further corrective measures in order to reach the deficit target for both 2012 and 2013. According to GKI, the government is not likely to sign a financial aid agreement with the IMF due to lack of willingness to introduce changes.
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