The downturn finally starts to moderate
Overview:
The economic downturn in Hungary has been even harsher than that endured by many of its neighbours given the macroeconomic imbalances with which it entered the global financial crisis. Policy implementation under the IMF program has been excellent with the fiscal deficit for 2009 outperforming its target. However, this tight fiscal policy will see Hungary exit recession slightly later and at a slower pace than the other countries in CEE. There are now, though, some concrete signs of a nascent turnaround in the most recent exports and industrial production data. The more favourable side to a collapse in domestic demand and a weakening of the forint has been a sharp improvement in the current account balance driven by a large trade surplus. Underlying inflation pressures are soft even if headline inflation has risen.