Articles
(2003/2004 Autumn semester)
1.
Deal ends wildcat postal strikes
Press Assocation
Monday November 3, 2003
The Guardian
A deal to end a series of wildcat strikes by thousands of postal workers was agreed today,
paving the way for a backlog of millions of items of mail to start being cleared.
The end of the unofficial strike action came after a deal was finally clinched at 3.30am. It
came after tortuous negotiations, lasting all weekend, at a central London hotel.
The breakthrough came when the Royal Mail chairman, Allan Leighton, and Billy Hayes, the
general secretary of the Communication Workers Union, became involved in the talks at 7pm
last night. The two announced this morning's deal.
A joint statement said: "The Royal Mail and the CWU are both pleased to have reached an
understanding that allows both parties to recommend a return to work.
"We will be talking to our people today and will now go to Acas to resolve all outstanding
issues relating to pay and major change.
"We wish to apologise to customers for the huge inconvenience that has been caused and our
first priority is to clear the backlog that has built up and get services back to normal."
Strikers were holding mass meetings in response to news of the deal. The Royal Mail said that
postal workers were returning to work in Coventry, Warrington, Hatfield, Chelmsford, and
parts of London.
There were no reports of any strikers holding out, although one striker in London said that he
did not anticipate a complete return to work until tomorrow morning because of the lateness
of the agreement.
Around 20,000 workers have taken part in unofficial action over the past two weeks, leading
to a huge backlog of letters and forcing the Royal Mail to seal thousands of post boxes in
London.
Clearing the backlog was expected to take at least a week, with post boxes in London are
likely to remain sealed until workers begin making headway.
Details of the agreement were being sent to postmen and women across the country.
Some strikers claimed that there had been a "major climbdown" by the Royal Mail after the
company pledged not to discipline anyone involved in the strikes.
Further talks on issues including working practices such as the Royal Mail's move to single
deliveries will be held at the conciliation service Acas later today.
The deputy prime minister, John Prescott, welcomed the deal. Cheques, orders and other
crucial items of mail will now be delivered to businesses, and further damage to the economy
can be avoided.
2.
19.09.2003 06:49:00 GMT www.interfax .com
Medgyessy: Economic policy aimed at restoring Hungary's export orientation
Budapest. (Interfax-Europe) - The government's economic policies have been focused on returning the
Hungarian economy to a sustainable path of export-driven growth, prime minister Peter Medgyessy said
Thursday at a business roundtable organized by Economist Conferences.
Growth in 2000 through to the first half of 2002 was driven by consumption, Medgyessy said. The forint was
overvalued, worsening the situation of exporters, and government efforts were focused on "prestige
investments" rather than infrastructure investments that improve long-term growth potential, he explained.
The government seeks to implement a "smaller, more frugal state," according to the prime minister. The
government announced a 10% headcount reduction on Wednesday, meaning a cut of 8000 in ministries alone,
Medgyessy said.
"We cannot promise further improvement in the standard of living at the present time," Medgyessy stressed.
The government has said it seeks to maintain real wages at their current levels in the government sector next
year," according to Mr. Medgyessy.
Also in the area of administrative reform, the prime minister promised to remove uncertainty in administrative
processes for companies by placing deadlines on requests for licenses in certain areas. Under the conception, if
there is no response from the relevant administrative body within one month, the request will be automatically
approved, he said.
Regarding the tax changes approved by the government Wednesday, Medgyessy said that the two percentage
point reduction in the corporate tax rate to 16% is the beginning of a process that will continue in coming
years. Hungary's local business tax, which is based on revenues rather than profits, will see reforms in the
coming years. The tax will be deductible from corporate taxes, he declared.
On the June devaluation of the forint, the prime minister noted that "everybody knew" the forint was
overvalued, creating serious problems for competitiveness of exports. "We had to take this step," Medgyessy
declared, because the exchange rate would not have "come into line" by itself.
"The effects were good, and the forint has a realistic value today," he added. The prime minister acknowledged
that the price of the move was high interest rates, but noted that these would soon "inevitably begin a gradual
decline."
The preceding government carried out a policy of "sweeping problems under the rug," according to
Medgyessy, by issuing state guarantees that increased government spending commitments but remained
officially off-budget. Bringing these commitments into the budget meant an increase of 3% of GDP in the 2002
budget deficit. In contrast, meeting the current government's campaign promises increased the deficit by just
1.3-1.4% of GDP, according to Medgyessy.
In addition, the prime minister criticized the Fidesz government's postponement of energy prices increases,
which meant the build-up of severe losses at power wholesaler MVM and its owner, the privatization agency
APV. These losses also had to be consolidated into the budget, he said.
Medgyessy noted that despite the fact that these items were brought into the budget deficit, Hungary's state debt
is still just 56-57% of GDP. "This is well below the Maastricht criterion," he stressed.
Last year's budget deficit of 9.3% of GDP will fall to "below 5%" in 2003, according to the prime minister. Next
year, there will be another "dramatic reduction" in the deficit, by another 1% of GDP, he added, which compares
to much lower reductions in other CEE and EU countries.
Medgyessy reiterated that the government has pledged to enter the ERM II exchange rate mechanism
immediately on Hungary's accession to the European Union, and to adopt the euro as the country's national
currency in 2008.
3.
<http://www.napigazdasag.hu/> 2003.9.24 - 10:25
Az import egyre gyorsabban nõ az exportnál
Idén január-júliusban a kivitel volumene 3 százalékkal, a behozatalé 8 százalékkal nõtt az
elõzõ év azonos idõszakához képest - jelentette a KSH. Egy hónappal korábban a kumulált
változások 2,5 százalékos csökkenést, illetve 3 százalékos növekedést mutattak.
Az árindexek a forgalom mindkét irányában egyaránt 2 százalékos forintárszint-csökkenést
jeleznek. A devizaárszint ugyanakkor változatlan maradt, mivel a forint a fõbb devizákhoz
viszonyítva szintén 2 százalékkal értékelõdött fel. A kivitel volumene a forgalomból 60
százalékkal részesedõ gépek és szállítóeszközök körében 9 százalékkal nõtt. Ezen belül
jelentõsen bõvült az export a különféle motorokat tartalmazó energiafejlesztõ beren-dezések,
a villamos gépek, valamint a híradás-technikai készülékek körében. Az export 30 százalékát
kitevõ feldolgozott termékekbõl ezzel szemben 9 százalékkal kisebb volumenû volt az
export 2003 január-júliusában, mint egy évvel korábban. A csökkenés döntõ mértékben még
mindig arra vezethetõ vissza, hogy a videojáték-export 2002 harmadik negyedévében
megszûnt. A behozatal volumene minden árufõcsoportban nõtt. A forgalom több mint felét
jelentõ gépek és szállítóeszközök körében 8 százalékos volt az emelkedés. Számottevõen
bõvült a híradás-technikai készülékek, valamint a közúti jármûvek importja, míg az irodagépbehozatal volumene elmaradt az elõzõ év azonos idõszaki forgalomtól. A 36 százalékos
forgalmi súlyú feldolgozott termékek volumene 6 százalékkal nõtt: jelentõsen emelkedett a
gyógyszerek, a mûanyagtermékek, valamint a fémtermékek behozatala. Az energiahordozók
importja 9 százalékkal bõvült. Ezen belül a legnagyobb tételt a földgáz képviselte, amelynek
forgalma 2003 minden hónapjában meghaladta az elõzõ év azonos hónapjában behozott
mennyiséget.
Molnár Csaba
Energiahordozók = fuels
4.
30.10.2003 06:47:00 GMT
Government layoffs finalized - 7000 people to be let off in 7.8% downsizing
Budapest. (Interfax-Europe) - The government accepted at its Wednesday meeting the
detailed breakdown by ministry of the previously announced headcount reduction in the
government sector, spokesperson Zoltan J Gal announced.
Of the total 88,266 persons employed at ministries and their institutions, 6921 will be laid off
by the end of this year, for an overall reduction of 7.8%. The downsizing will save taxpayers
HUF 20 billion in wages next year, Gal said, but he could not put a figure on expected
severance expenditures.
Headcount will be reduced by a total 10.35% at the ministries and the Central Statistical
Office (KSH), the National Health Insurance Fund (OEP) and the National Pension Fund
(ONYF), with the number of employed to be cut by 2603 to 22,538. The overall headcount at
regional and local institutions of ministries and the KSH, OEP and ONYF will be reduced by
6.84% or 4318 to 58,807.
The largest cut in nominal terms will be at the institutions of the finance ministry, with the
2000 to be laid off accounting for nearly 30% of the total downsizing. Among the ministries
themselves, the education and finance ministries will see the deepest cuts, with layoffs of
15.33% and 12.28%, respectively. The reduction will be the smallest at the labor ministry,
with just a 7.02% headcount reduction.
http://www.interfax.com/com?item=Hung&pg=0&id=5667170&req=
5.
Forecast
Oct 27th 2003
Country Forecast
Hungary
The governing coalition, led by the Hungarian Socialist Party, looks set to serve out its term,
which runs until mid-2006. The economy is still suffering from the effects of the strong
currency appreciation and excessive wage rises of 2001-02. In addition, export markets have
been weak, and look unlikely to offer any strong stimulus to growth until mid-2004 at the
earliest. The government and the National Bank of Hungary (NBH, the central bank) often
collide over policy, despite claims of consensus—both want to adopt the euro in 2008. In June
the NBH devalued the forint’s central rate against the euro, only to raise interest rates by 300
basis points later the same month. Ambitious budget targets are unlikely to be met in 2004-05.
In the short term, strong private consumption growth should sustain real GDP growth close to
3%, but the current-account deficit is forecast to reach 6% of GDP this year. Growth will pick
up in 2004-05, but external deficits, although shrinking, will remain large, causing a ramp-up
in external borrowing, given the weakness of foreign direct investment (FDI).
Key changes from last month
Political outlook
The Socialists and their liberal coalition partner, the Alliance of Free Democrats, have
reached a compromise over tax, and the drafting of the 2004 budget has proved smoother than
originally thought. The government looks more stable than ever.
Economic policy outlook
The government’s announcement in September that it was lowering the corporate tax rate and
cutting the public-sector workforce was unexpected. These measures look likely to set the
stage for further institutional and structural reforms in 2004-05.
Economic forecast
The forecast has changed little in the past month. Growth is expected to remain modest until
the middle of 2004, before picking up speed in the second half of the year as the EU enters
into full recovery.
http://www.economist.com/countries/Hungary/index.cfm
http://www.economist.com/countries/Hungary/profile.cfm?folder=Profile-Forecast
6.
http://news.bbc.co.uk/1/hi/world/europe/2945329.stm
April 13, 2003
European Press Review
The low turnout in Hungary's European Union membership referendum has caused concern,
the German Government is criticized for its handling of economic reform, Leipzig receives a
boost in its Olympic bid, and "Shock and Awe" acquires commercial cachet.
A poor showing
The Hungarian press tries to find the reasons and apportion blame for the low turnout in
Saturday's referendum, which gave the necessary backing for EU membership.
Magyar Hirlap says the success of the referendum "left a bitter aftertaste", with more than half
of the electorate staying away from the voting booths.
The government campaign, it says, "did not stress sufficiently the importance of participation
and the danger of invalidation, but only urged a yes vote, which to many was a foregone
conclusion".
The article warns that the low turnout could cause a headache for Brussels and the candidate
countries still due to hold referendums.
"This is why the EU capital did not receive the result of the Hungarian referendum with a
standing ovation," it says.
"The Hungarian indifference could be a bad omen for the Polish and Baltic referendums,
where strict thresholds are prescribed," the paper concludes.
Another Hungarian daily, Nepszabadsag, close to the ruling Socialist Party, puts some of the
blame on the opposition.
"Who would want to rush to a wedding about which the best man announces that the
entwining hands are only holding on to each other for the promise of the dowry?" it asks.
Austria's Der Standard describes the low turnout as "a nasty surprise" for the government.
"Things could have gone badly wrong," the paper says, pointing out that if fewer than 25% of
all registered voters had voted in favour, the poll would have been invalid.
1792 n
7.
American mutual funds
No end in sight
Nov 20th 2003
From The Economist print edition
The scandal continues
IT GETS uglier by the day. Federal and state regulators are uncovering more and more
instances of shady practice in America's mutual-funds scandal. Three top executives—
Lawrence Lasser of Putnam Investments, Richard Strong of Strong Financial and Janus
Capital's Richard Garland—have resigned. A host of lower-ranking moneymen have been
fired. While it is uncovering wrongdoing, American officialdom is divided—acrimoniously—
over how to put things right.
The latest revelations continue to centre on the “late trading” and “market timing” that fund
managers allowed. On November 14th, for instance, Charles Schwab, a supermarket of
mutual funds, said it was looking into late trading in mutual funds it oversees. Late trading is
the illegal practice of buying or selling mutual-fund shares at the trading day's price after the
market has closed. Market timing is the rapid trading of mutual-fund shares in order to take
advantage of the gap between the price of a fund, which is set once a day, and the continuous
changes in the value of the underlying portfolio of securities. It is generally legal, although
many funds promise not to engage in it.
Other practices are also under scrutiny. On November 17th Morgan Stanley, an investment
bank with a mutual-fund arm, agreed to pay $50m to settle civil charges by the Securities and
Exchange Commission (SEC) over allegations that the firm paid its brokers more when they
sold its own mutual funds. The firm still faces several lawsuits as well as civil charges in
Massachusetts.
How much trust has been lost by the funds, which look after $7 trillion of Americans'
savings? Assets under management by Putnam, once the fifth-biggest fund, had fallen from
$277 billion at the end of October to $256 billion by November 14th. The drain continues: on
November 17th CalPERS, America's largest pension fund, sacked Putnam as manager of $1.2
billion of its assets. Strong Financial's funds have lost $226m in the past couple of months.
Others have seen pension funds and insurers withdraw tens of millions of dollars.
Although institutional investors have taken revenge on some firms named in the scandal, there
has not yet been a general investor revolt against the industry as a whole. According to
Lipper, a fund tracker, investors poured $19.5 billion into equity funds in September. An
estimated $24.4 billion went in during October.
Meanwhile, lawmakers and regulators are trying to draw up new rules for mutual funds. On
November 19th the House of Representatives passed a bill that would make market timing
less profitable. The previous day, the Senate Banking Committee discussed reform proposals.
The SEC's chairman, William Donaldson, told the committee that the SEC, which has been
criticised for reacting too slowly to America's financial scandals, would set up an office of
risk assessment to improve its performance. The SEC is due to discuss new fund-trading rules
on December 3rd.
Paul Sarbanes, a Democratic senator, told Mr Donaldson off for a “counterproductive” public
feud with Eliot Spitzer, attorney-general of New York state, the financial industry's keenest
prosecutor. Mr Spitzer had criticised a settlement between the SEC and Putnam Investments
and had vowed to continue his own investigation of the firm. He was also scathing about the
SEC's failure to look into mutual-fund fees. Mr Donaldson replied that the SEC welcomed cooperation from state regulators, but also said it was “frustrating to work with someone in
partnership and read the next day in the newspaper that they are attacking your agency.” In
other circumstances, divisions among regulators might be good news for a beleaguered
industry. Don't bet on it.
8.
Designers of forecasting toolkit win Nobel prize
By Alan Beattie, International Economy CorrespondentPublished: October 9 2003 5:00 | Last
Updated: October 9 2003 5:00 <http://news.ft.com/c.gif>
Two academics who des-igned essential parts of the modern statistical toolkit for analysing
financial markets and macroeconomic forecasting have won this year's Nobel prize for
economics.
Clive Granger, a British economist now at the University of California in San Diego, and
Robert Engle, an American at New York University, made critical breakthroughs in
techniques to handle "time series" variables - data recorded at regular intervals. They will
share the prize of SKr10m ($1.3m, ?1.1m, £800,000).
Prof Granger's major discovery was in the invention of "cointegration", a means of analysing
the relationship between two variables, such as wealth and consumption, both of which had a
trend over time. Previously, economists had often claimed a correlation between two or more
such variables which turned out to be spurious, being driven simply by the fact that both
followed a trend - an error pointed out by Prof Granger in the mid-1970s.
In subsequent work over a decade later, Prof Granger established that such "non-stationary"
variables could be combined in ways which allowed accurate statistical inferences to be
drawn. He also developed the "Granger causality test" to estimate which of several variables
led movements in the others.
Because many macroeconomic variables such as income, consumption, the price level and
gross domestic product have persistent trends, the techniques that Prof Granger developed are
now routinely used by economic forecasters at central banks, at finance ministries, in
academia and in the financial markets.
"Suddenly, after Clive's breakthrough, we had apparatus that allowed us to disentangle those
things that merely moved together over time from those that were actually related to each
other," said Kenneth Wallis, professor of economics at Warwick University in the UK and
former editor of the academic journal Econometrica, which published pathbreaking articles by
both men.
Although Prof Engle did some work with Prof Granger, his award was for separate research
on variables whose volatility varies over time. It is commonly used to analyse prices in
financial markets. He told reporters yesterday he was delighted with the prize, which reflected
how widely the techniques he developed had become used.
Traditional tools of analysis assumed that volatility was constant. The techniques Prof Engle
developed, particularly autoregressive conditional heteroskedasticity (ARCH) models which
predicted volatility would depend on its own behaviour in the past, are now widely employed
by investors and financial institutions assessing the risk of portfolios.
Prof Wallis said that the two academics had created a highly influential centre of excellence at
the University of California at San Diego, though Prof Engle was tempted away to NYU.
9.
October 9, 2003
THE BALLOTING
Signaling Voter Unrest, Schwarzenegger Cut Deep Into the Democrats' Base
By KATHARINE Q. SEELYE and MARJORIE CONNELLY
[L] OS ANGELES, Oct. 8 — Arnold Schwarzenegger pulled together a vast coalition of
dissatisfied voters from across all demographic groups in California's recall election on
Tuesday, winning among all age groups and, perhaps most ominously for Democrats,
appearing to make inroads into their traditional base, surveys show.
In a major sign of voter unrest in this Democratic bastion, one-quarter of the people who
identified themselves as Democrats voted to recall Gov. Gray Davis, a Democrat, and 18
percent voted for Mr. Schwarzenegger, a Republican.
Mr. Schwarzenegger also won 31 percent of Hispanic voters and 17 percent of black voters,
doing significantly better with both groups than did Bill Simon Jr., the Republican candidate
for governor in 2002.
And despite the last-minute accusations about unwanted sexual advances toward women, Mr.
Schwarzenegger narrowed the gender gap that Republicans traditionally face, winning the
votes of 49 percent of the men who voted and 43 percent of the women.
In fact, Mr. Schwarzenegger did almost as well with women as Mr. Davis, as measured by the
49 percent of women who supported the Democrat by voting against his recall.
More women tend to be Democratic than Republican, and this is particularly true in
California, an overwhelmingly Democratic state. Here, only 36 percent of women describe
themselves as Republican, and 71 percent of them voted for Mr. Schwarzenegger. So did 20
percent of Democratic women.
Mr. Schwarzenegger won pluralities of women in all age groups. He did the worst with
women under 30, but still got 41 percent of their votes. His strongest supporters were men
ages 30 to 44.
In addition, Mr. Schwarzenegger demonstrated enough strength to fend off any criticism that
he had become governor with only a minority of the vote. Even with 135 candidates on the
ballot, Mr. Schwarzenegger won more votes in favor of his candidacy (4,358,000, with 99.8
percent of the votes counted) than Mr. Davis won against the recall effort (3,541,000). And
that was more than the 3,533,490 votes Mr. Davis won last November, when he was reelected to a second term.
Combining Mr. Schwarzenegger's votes with those for another Republican, State Senator
Tom McClintock, about 60 percent of those who voted on Tuesday did so for Republicans —
possibly good news for the White House, which now has plausible reasons to see California
as up for grabs in 2004, although President Bush's approval ratings in California are at 51
percent, no better than the rest of the country (but no worse, either). Mr. Bush is scheduled to
meet with Mr. Schwarzenegger next week.
"The Schwarzenegger campaign excited Republicans, Hispanic voters and union-member
households," said Ed Gillespie, chairman of the Republican National Committee. "The
Democrat Party and the Democrat presidential candidates should take heed."
Democrats looking for any signs of hope might find them in the fact that Mr.
Schwarzenegger's weakest support was among people with advanced degrees and people
making less than $50,000 a year. And his assertion during the campaign that he would draw
new voters into the party did not materialize significantly. Only 3 percent of voters said they
had never voted before, and another 3 percent said they rarely voted. Of those two groups of
voters, Mr. Schwarzenegger won about half of them.
The surveys also showed that more than two-thirds of the voters had made up their minds
more than a month before the election. As a result, the intense publicity in the last week of the
campaign about accusations of Mr. Schwarzenegger's unwanted sexual advances appeared to
have had little effect on how women — and others — voted.
Surveys indicate that the sputtering economy remains an overriding concern for California
voters.
A full 83 percent said the economy was in bad shape. That number shows a serious erosion of
confidence in the state's economic health since Governor Davis was re-elected 11 months ago.
At that time, 47 percent perceived the economy to be in bad shape, according to a survey by
The Los Angeles Times.
Various surveys have shown that a vast majority of voters believe the state is on the wrong
track, an important signal of discontent in electoral politics, and that voters have been alarmed
about the state's plunging credit rating, the exodus of more than 100,000 manufacturing jobs
and a budget deficit of billions of dollars.
The surveys also suggest that Mr. Davis misinterpreted the economic anxiety in his state or
did not appreciate it. This was evident in his signing of a bill to allow illegal immigrants to get
drivers' licenses, a move that the survey found was opposed by 70 percent of voters.
Interviews with voters have shown that many Californians perceive the drivers' license issues
as less a social issue than an economic one. By giving licenses to illegal immigrants, many
voters say, the state would attract more illegal immigrants who would be a drain on already
strained resources like schools.
10.
November 18, 2003
Hemisphere Trade Talks Moving Slowly
By SIMON ROMERO
By The New York Times
MIAMI, Nov. 17 - Negotiators gained little ground in surmounting differences over a measure
intended to scale back a trade agreement for 34 countries in the Americas on Monday, but
they were able to agree on selecting a headquarters city for the trade pact by next summer.
The impasse over efforts by negotiators from the United States and Brazil to pare back a
proposed hemispheric trade agreement showed few signs of being resolved.
Negotiators from Brazil trumpeted a proposal to remove sensitive issues like government
contracts and intellectual property protection from a Free Trade Area of the Americas.
Instead, it would focus on lowering some tariffs and allowing groups of countries to negotiate
more ambitious agreements among themselves.
That proposal is considered a way to salvage efforts to create the free trade area by early
2005. The United States agreed to the proposal in a series of discussions with Brazilian
officials in recent days.
Seeking to reaffirm Brazil's commitment to sticking to the original schedule for forming the
free trade area, Adhemar G. Bahadian, co-president of the negotiations, said Monday that
negotiators had agreed to select a headquarters city by next July or August. Several cities are
competing for the headquarters, including Miami; Panama City; Atlanta; Port-of-Spain,
Trinidad; and Puebla, Mexico.
Related links:
Ftaa offical web page:
http://www.ftaa-alca.org/alca_e.asp
11.
Hungary pumps up key rates to save forint
By Christopher Condon in Budapest and Stefan Wagstyl in London Published: November 28
2003 18:45 | Last Updated: November 28 2003 19:19 .l
Hungary's central bank lifted key interest rates on Friday by 300 basis points to 12.5 per cent,
one of the highest levels in Europe, in a dramatic bid to forestall a currency crisis.
The surprise move, which followed a similar emergency 300 basis point increase in June,
stemmed a fall in the Hungarian forint.
But the bank's intervention left investors doubting whether enough had been done to restore
confidence in Hungarian economic policy-making.
It also raised questions about how soon Hungary and other ex-communist states entering the
European Union next year would be ready for the next stage of economic integration - joining
the euro.
Zsigmond Jarai, the central bank governor, told a news conference the large hike was
necessary to defend its inflation targets and "to prevent expectations for further rate hikes".
But Gyorgy Barcza, economist for ING Bank, the Dutch bank, in Budapest, said: "There are
fundamental reasons behind this problem and I think we are still on the verge of a currency
crisis."
Vadym Sliusar, a fixed-income fund manager for Deutsche Asset Management, a fund
manager, said: "This is useless. It won't help at all."
The forint has fallen from about 235 to the euro at the beginning of the year principally
because of international investors selling Hungarian bonds out of concern about high budget
and current account deficits.
The forint fell to about 270 before it was bolstered by the June rate rise but has since fallen
again.
On Friday the currency opened at a five-month low of 269 to the euro and firmed soon after
the announcement to 263.5 and closed around 263. Bond yields rose slightly.
Hungary's financial credibility began to erode in 2002, an election year, when the budget
deficit reached 9.6 per cent of gross domestic product. While cuts have been made, it is still
expected to reach about 6 per cent this year.
For next year, parliament this week passed an outline plan fixing a deficit target of 3.8 per
cent, but analysts say it might exceed 4.5 per cent. Also, flagging exports have inflated
Hungary's expected 2003 current account deficit to 6.5 per cent of GDP.
Hungary's plans to join the eurozone as quickly as possible have also served to undermine
market confidence.
Investors increasingly doubt whether the government and central bank's target date of January
1 2008 is realistic. They worry whether high interest rates might now slow economic growth
and make budget deficit cuts even more difficult to achieve