Hungary’s economy may grow more than 4% this year, double the previous forecast, thanks to the country’s bumper crop of cereals seen in 2008, London-based market analyst 4cast said, Privátbankár.hu reports.
4cast has marked up its growth forecast for the year to 3%, adding the final figure may even come in between 4% and 5%. This is way over the current average market consensus of 2%.
The government’s fiscal restrictive measures last year knocked back the economy by themselves, which was further aggravated by a 20% fall in agricultural yields due to severe spring frost and summer droughts.
Wheat and corn production was down nearly a third to 8 million tons from 2006, which contributed to a 0.6-0.8 percentage point drop in the GDP that year, 4cast said.
But this year’s crop output is expected to hit 16 million tons, which could rev up economic growth to about double the pace originally forecast.
Agriculture accounts for only about 4%-5% of the country’s GDP, but it can still have a considerable impact on the economy as it did in 2004, when a bumper harvest boosted Hungary’s GDP growth to 4.8%, which otherwise would have been only about 2%, the analyst said.