Looking good, for nowFinance Minister János Kóka last week told MTI news agency that he believes Hungary will meet the criteria for adopting the euro in 2009. He said that fiscal consolidation (that is, the unpopular package of tax increases and public sector spending cuts introduced last summer) would bring the national budget deficit to within the stipulated threshold of 3% of GDP.
Short-term outlook for the economyWith the arrival of the holiday season, markets are shifting to the usual summer trading mood – characterised by slower than usual trading activity with many investors being on holiday far away from their desk. It is the perfect time for a brief look at the prospects of the Hungarian macroeconomic environment for the second half of the year. Obviously the fiscal policy agenda remains the key factor for the short-term economic outlook.
Hungary’s food stores came out fourth best in a study of seven regional countries plus Russia, but the major failing came in customer service. The study, by International Service Check, found that while Hungarian stores scored highly in the fields of layout and checkout system, but scored abysmally when it came to dealing with customers.
Automotive parts producer Rába has signed a three-year supply contract with Russian Gaz Group for the period 2007-2010 and with a total value of HUF 16.5 billion (EUR 67 million).
Union activists demonstrated against the Suzuki factory in Esztergom to protest the eleven-hour working day introduced by the company on 1 July. The demonstrators were not Suzuki employees, who allegedly are afraid of reprisals. Philosopher Miklós Tamás Gáspár took part in the demonstration.
Shell Hungary has set up a gas trade division with the intention of operating in the industrial segment of the market, CEO István Varga announced last week.
The chief of the Linamar Corporation, which manufactures cars parts and agricultural machinery, last week threatened to pull out of Hungary after failing to secure its goal of de-listing Linamar Hungary from the Budapest Stock Exchange. Linamar Corporation, the majority shareholder, asked for the vote, but it fell just short of gaining the required support level of 75% of the shareholders present at the meeting. Linamar Corporation CEO Linda Hasenfratz said that if her company was not able to acquire the shares at a reasonable price, it would “need to look alternative locations” for its European production centre.
Locals in the village of Kulcs, located near the Hankook tire factory in Dunaújváros, last week started a referendum aimed at stopping the South Korean giant from building a residential park for 400 of its employees. Hankook wants to buy 21 hectares in the village and build apartments and homes, as well as a new community centre for the village. The project would cost a total of around HUF 6 billion (EUR 24.33 million).
A foreign investor is planning to build a second-generation biofuel plant in an old alumina factory in AlmásfüzitĹ‘, north Hungary, the head of Iverg Consulting said last week. Pál Gágyor, who is involved in the negotiations, said the investment would cost HUF 100 billion (EUR 406 million) and that the new plant would produce 320,000 tonnes of fuel from one million tones of maize annually. Second generation biofuels give out around 30% more energy than earlier types and can be mixed with traditional fuel without damaging car engines.
The National Health Fund spent 14.1% less on drug subsidies – HUF 158.4 billion (EUR 642.8 million) – in the first half of this year than in the previous year, a fund official said. Drug companies are also struggling to collect on monies owed by hospitals, the business daily Magyar Hírlap said, claiming that the hospitals owed billions of forints. The paper said that confusion brought about by healthcare reform was partly to blame.