Economy 15 April 2010, 3:48pm

ANALYST VIEW - Danske sees steady rise in Hungary's jobless rate ahead

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Danske Bank has on Thursday released its updated macroeconomic forecasts on Hungary, taking into account the latest economic releases for February and March. The Copenhagen-based bank expects the Hungarian economy to contract by 1.8% this year, but grow by as much as 3.1% in 2011. It sees a lacklustre private consumption recovery, largely flat industrial production and a steady rise in the rate of unemployment ahead.

The Hungarian economy has moved up over the past couple of quarters, but private consumption and investment remain quite lacklustre, limiting a swift recovery, Danske said..

“We do not expect positive year-on-year growth rates before Q4 10 at the earliest."

Danske has revised its forecasts for the Hungarian economy down slightly to -1.8% y/y in 2010 and 3.1% y/y in 2011.

“This should lead to further deterioration of Hungarian labour market conditions," it added, expecting the U-rate to continue rising over the next couple of years - to 13.6% in 2010 and 14.7% in 2011, which “should further keep wage growth low at 3.3% yr/yr in 2010 and 4.5% yr/yr in 2010."

Danske noted, though that external balances have developed quite positively for the Hungarian economy.

The trade balance has been in surplus for the past year and it should remain there going forward, it said.Furthermore, the current account balance, which has been in a large deficit over the past couple of years, is now moving into positive territory and Danske expects C/A surplus in the next couple of years.