Hungary's Accession to the EU: The impact on selected areas of Hungarian-Austrian relations [antikvár]

Joint statements in the area of macroeconomic developments, regional economic developments, labour markets and migrationP1a. Short- and medium-term forecast for HungaryAfter the years of the transitional recession and the painful 1995 stabilization, the Hungarian economy entered a growth path characterized by strong expansion of exports and investments. The engine of the recent take off has been primarily the foreign sector. Growth has been coupled with rapid structural changes and modernization: in 1998 already more than half of the exports were engineering products. Transition to a market economy reached its final stage: problems to be solved are the completion of privatization and further reforms in public finance.Unless a serious deterioration of external conditions to growth takes place or considerable policy mistakes were made, the present growth path seems sustainable for the short and medium run. In the period 1999-2004 the average annual rate of GDP growth (base line scenario) may range between 4% and 5.5%, exceeding the projected EU average growth rate (2.5%) to a substantial extent.A major constraint to growth remains the requirement for a manageable level of the current account deficit in order to avoid a deterioration of the (foreign) debt service indicators. In order to keep growth sustainable, expansion of consumption, despite justified impatience of the population in general and some professional groups in particular, may have to lag, to some extent, behind the GDP growth.Keeping the general government deficit below 4% of the GDP necessitates further fiscal reforms.Lasting imbalances in the above mentioned fields may lead to corrective measures invoking the danger of return to the infamous stop - go cycles. Return to the stop go cycles would imply lower average growth in the period concerned. However, exceptionally favourable external conditions and a rapid catching up of the domestic owned firms to the (already sizeable) sector with foreign ownership may result in somewhat faster economic growth than projected in the base line scenario.