Hungary: Expenditure cuts needed
For 2006, real GDP is set to grow at a rate near its trend of about 4%. However, weakening domestic demand, due to tight austerity measures, is projected to slow growth in both 2007 and 2008, despite exports continuing to expand strongly.
Given the alarming fiscal imbalance (this year the general government deficit is likely to be over 10% of GDP), the announced frontloading of an austerity package with revenue increases is probably unavoidable. However, for consolidation to break with the Hungarian habit of missing fiscal targets, permanent expenditure cuts linked to structural reforms are needed.
|Population (000s), 2005||10 087|
|Area (000 sq km)||93|
|GDP (Billion USD), 2005||173.3|
|Life expectancy at birth (Women, Men), 2004 ||76.9, 68.6|
|Total labour force (000s), 2005||4 205|
|Government type||Parliamentary Democracy|
|Indicators||% change unless otherwise indicated|
|Consumer price index||3.9||6.7||4.1|
|Unemployment rate (%)||7.5||7.7||7.6|
|General government financial balance|
|Current account balance (% GDP)||-7.3||-6.3||-5.6|
No. 258/259, December 2006