Hungary’s government decided on Wednesday to lower its forecast on economic growth to 0.9% from 1.5% for 2012, local business daily Napi Gazdaság reported on Thursday. The downward adjustment means that further HUF 250 billion fiscal adjustment will be needed on top of the already announced packages to meet the deficit target. This would total an adjustment of about HUF 1,600 billion.
The cabinet decided at yesterday’s government meeting to cut its 2012 GDP estimate to 0.9% from 1.5%, the paper learned, adding that this would require a HUF 250 bn adjustment on top of the measures included in the 2012 Budget.
The general government deficit target for next year is 2.5% of GDP, which should be achieved by a HUF 1,400 billion balance improvement. This should be topped up by the aforementioned HUF 250 bn fiscal adjustment, resulting in an unprecedented package.
It will be also highly important how fast growth the European Commission will project for Hungary in its autumn forecast to be published today.
It was leaked two days ago that the official GDP prognosis will be revised downward. Next year’s economic growth will have a major impact on the budget. According to some estimates, there will be a HUF 100-150 bn budget slippage due to the feebler growth.
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