Hungary’s economy is set to see accelerating growth from early next year, a major London-based investment banking group said on Wednesday.
In its Emerging Markets Monthly research publication released in London, Bank of America-Merrill Lynch said that “while it may still feel like a recession”, the worst is over for Hungary.
“We forecast quarter-on-quarter GDP dynamics to turn positive in early 2010 and keep accelerating throughout 2010-2011, driven initially by manufacturing exports and then by a rebound in domestic demand reflecting a mix of monetary easing, collapsing inflation and the likely fiscal easing in 2011″.
It said that the slight increase in the headline fiscal deficit in 2008-2010 masks the massive improvement in Hungary’s underlying fiscal position, a result of “the draconian pro-cyclical fiscal tightening” that is estimated to be worth 6-7pc of GDP in 2007-2010.
Considering cyclical dynamics, “our projected headline fiscal deficits of 3.8-3.9pc/GDP in 2009-2010 translate into a structural fiscal surplus of around 0.5-1pc/GDP in 2010 … this makes Hungary’s fiscal position among the strongest in the world and creates room for fiscal easing – and stronger growth – in 2011″, BoA-ML said.