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The weakness of the eurozone is partly the cause for the sluggish performance of the Hungarian economy, the EIU noted. "Hungary's foreign balance is set to again become a net drag on overall growth throughout the forecast period. This will certainly be the case next year, when a boom in private consumption will be part of a general rebound in domestic demand brought on by election-year spending, with negative consequences for the external balance," the report added.
The EIU forecasts economic growth in central and eastern Europe as a whole (Czech Republic, Hungary, Poland, Slovakia, Slovenia) to fall from last year's 4.8% to 4.1% in 2005, with growth slowing further to 3.9% by 2009. Meanwhile, inflation in the region is expected to decline to 2.7% in 2005 after rising to 4.2% last year from to 2.1% in 2003.
