In its forecast released in September GKI has already indicated that external demand would slow down and domestic economic policy exerted a strongly adverse effect on domestic demand and financial trends. The Hungarian economy reached a dead end. Genuine turn is needed in economic policy.
In its forecast released in September GKI has already indicated that external demand would slow down and domestic economic policy exerted a strongly adverse effect on domestic demand and financial trends. Based on these considerations GKI projected 1.5 per cent GDP growth in 2011 and – as the first institution among those involved in forecasting – a 1 per cent recession in 2012. It also stressed that a new agreement with the EU and the IMF could be necessary as well. Trends of the past months have justified this prognosis. According to the evaluation of GKI the Hungarian economy reached a dead end and genuine turn is needed in economic policy. There is no alternative to the IMF agreement. In the possible absence of an agreement the reactions of international financial markets could raise the danger of direct government insolvency. Even for the successful launch of negotiations with the IMF changes, including the recovery of credibility and trust as well as the return to the principles of the market economy are unavoidable. Nevertheless, all this will be enough only for avoiding a recession in 2012 deeper than the projected 1.5 per cent. The recovery of the confidence of financial markets and foreign direct investors may bring results in the real economy only in 2013 the earliest.
You can download the forecast from here.
