The Hungary Commercial Banking Report Provides Independent Forecasts and Competitive...

The Hungary Commercial Banking Report Provides Independent Forecasts and Competitive Intelligence on the Country's Commercial Banking Industry

DUBLIN, Ireland--(Business Wire)--
Research and Markets
(http://www.researchandmarkets.com/reports/c88333) has announced the
addition of "Hungary Commercial Banking Report Q1 2008" to their
offering.

From Q108 we will be calculating the Commercial Banking Business
Environment Rating (CBBER) for each of the countries surveyed by BMI.
This will permit a more systematic and comprehensive comparison of the
conditions within the banking industries of the various countries than
was possible in the past. For each country, it will also facilitate a
comparison of the conditions within the banking sector and conditions
prevailing in other sectors.

Hungary's overall CBBER is 65.5. The equivalent figures for the US
and the eurozone are 84.8 and 81.4, respectively. Hungary's CBBER is
second only to Greece (69.1) of the Central and Eastern European
countries surveyed by BMI. Within the CBBER, the most important aspect
is the banking market element of the limits of potential returns. This
element accounts for 42% of the overall CBBER. Hungary's rating for
this element (56.9) is significantly lower than the overall CBBER and
significantly lower than the country element of the limits of
potential returns (68.0).

In contrast, Hungary scores highly in both the banking and country
elements of risks to realisation of returns, 76.7 and 74.1,
respectively. These scores act to offset the low banking element of
limits to potential returns in Hungary's overall CBBER. Sharp declines
in domestic consumption will continue to depress economic activity in
Hungary over the medium term. While an anticipated improvement in
government finances will help to justify new spending commitments
beyond 2008, we are concerned that Hungary will continue to fall
behind its regional peers in terms of competitiveness, which is bound
to present further risks to economic growth.

Extensive spending cuts and tax hikes introduced by the government
in 2006, amid a gaping budgetary shortfall of 9.2% of GDP that year,
will continue to set the tone for the overall macroeconomic picture in
Hungary over our forecast period. The fiscal tightening measures will
continue to weigh on economic activity in the medium term, where we
have recently revised down our economic growth outlook for 2007,
estimating 2.6% growth, down from a previous 3.4%. We expect real GDP
growth to remain subdued in 2008, at 2.9%, until Hungary's economic
performance is lifted by renewed spending commitments and rising
household consumption, bringing real GDP growth in 2009 to 4.5%.
Growth will remain above the 4.0% mark through to 2012. Although
overall economic growth is set to remain robust after 2009, Hungary's
economy is likely to continue lagging behind its regional peers, with
growth set to average 3.8% through our five-year forecast period, well
below that of the Czech Republic and Slovakia, with 4.8% and 6.5%
averages forecast for the same period, respectively.

During the first half of 2007, government expenditure remained
below the H106 level, declining by 7.6% in Q107 and 2.7% in Q207.
Considering that government consumption is expected to account for
almost 10% of GDP in 2007, real GDP growth in H107 came in at a
lacklustre 1.9% year-on-year (y-o-y) on the back of an 11-year low in
GDP growth of 1.2% y-o-y in Q207. This is a massive slowdown compared
to 3.7% y-o-y growth in H106. However, with government efforts to rein
in the enormous budget deficit increasingly bearing fruit, we expect
government spending programmes to resume during the latter part of
2008, which should help stimulate the economy. Indeed, we expect the
budget deficit to narrow to 6.6% of GDP in 2007, declining further to
4.1% of GDP in 2009, at which point government spending will begin to
rise. We forecast government spending to increase by a moderate 1.4%
in 2008, following a projected decline of 0.4% in 2007. Thereafter, we
expect government expenditure to continue rising throughout our
forecast period, at a rate of 1.9% and 2.2% in 2009 and 2010,
respectively.

For more information, visit
http://www.researchandmarkets.com/reports/c88333

Research and Markets
Laura Wood, Senior Manager
Fax: +353 1 4100 980
press@researchandmarkets.com

Copyright Business Wire 2008