Hungary's recession is worse than we bargained for, says Gyurcsany

Hungary's recession is worse than we bargained for, says GyurcsanyBudapest - Hungarian Prime Minister Ferenc Gyurcsany said on Wednesday that the Hungarian economy could shrink by 2 to 3 per cent this year, a far deeper recession than recent government predictions suggested.

"This year, the economy could show negative growth of minus 2 to 3 per cent, rather than the minus 0.9 per cent entered in the 2009 budget," Gyurcsany said on a breakfast news show on state-owned Hungarian television.

Analysts were sceptical about the government's prediction of the severity of the impending recession back when figures were announced in December.

Hungary's socialist prime minister said is was not possible to abandon current policies to balance the state finances, but beyond that "no figures are set in stone."

Gyurcsany ruled out tax hikes, saying they would hamper growth.

"Nor is there any chance of tax reductions, but we must restructure the tax burden," he added.

He was speaking the day after a visit by head of the International Monetary Fund, Dominique Strauss-Kahn, who was in town to make sure Hungary was honouring pledges of good financial housekeeping.

Strauss-Kahn was satisfied with Hungary's austerity measures so far, but said there was room for further economic reforms.

The IMF, EU and World Bank granted Hungary an emergency 20-billion-euro credit line last October as its economy teetered on the brink of collapse.

"The global financial outlook is significantly worse than it was in the autumn, and domestic inflation will be lower than expected, so everything will have to be recalculated," said the prime minister. (dpa)

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