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SUMMARY
Since mid-1996 economic growth has been gaining momentum in Hungary. Contrary to earlier episodes of taking off, the external equilibrium is now out of the danger zone. Growth is driven by investment and buoyant export expansion, primarily the result of the maturing process of several major FDI projects started over the last seven years.
The WIIW's new medium- and long-term Analytical Forecast for
Hungary outlines three possible scenarios for the period up to 2002. In
the 'baseline' scenario it is assumed that the economic policy pursued
since March 1995 will be maintained and that the present tendencies of
economic development continue and lay the foundations for a sustainable
growth path. A second, 'stop-go scenario' reckons with higher initial growth
resulting from excessive expansion of consumption due to policy mistakes
in the wake of the May 1998 elections. Developments along these lines would
soon necessitate renewed restrictive measures, pushing the economy back
into the stop-go cycles. A third, 'big-bang' scenario assumes a possible
overheating of the economy due to excessive inflows of foreign capital
or disproportional growth performance in various segments of the economy
and its implications. The result would also be a return to the stop-go
cycles.
WIIW Analytical Forecast, S. Richter: HUNGARY: Towards Sustainable
Growth, December 1997, 44 pp. including 29 Tables,
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