Policy Agenda’s Economic Development Index (EDI), which indicates a short-run forecast of the economic growth, stood at 1,04 in the last quarter of 2011. The figure is 0,3 point lower than that of the 3rd quarter in 2011. All these are indicators of a further slow-down of the economy in the next half year – according to the Policy Agenda Research Institute’s analysis published by MTI on Wednesday.
The EDI is a leading indicator index (similar to which is in use in many countries, on the basis of the method applied in the OECD) whose function is to forecast the changes in economic growth in the short-run.
According to the Policy Agenda’s report the latest changes in the EDI justify the institute’s former macro-economic prognosis that the Hungarian GDP may fall back with about 2% in 2012. The causes of this process are large scale lessining of both the inner and outer consumer demand and a possible IMF – EU loan could trigger positive changes in the Hungarian economic performance only in the third – fourth quarter of 2012.
According to the report, the analysis of three factors – the financial state of the households, the achievement of the enterpreneur sector and the monetary and financial situation of the Hungarian economy – equally show that the economy’s situation will further worsen during the next few months. For the time being, this tendency can be detected in the operation of the firms and also in the monetary situation, but the people’s financial troubles will also increase in the future.
Most of the index’s elements suggest either a further decrease or a continuously low economic performance for the following quarters of the year.
The value of EDI in the last two years reflected the fluctuation of the economic growth in each quarter of 2010 and 2011 – Policy Agenda states.
The situation of economic growth in Hungary got worse between the second quarter of 2010 and the end of the year; then at the beginning of 2011 it seemed to improve a bit, while after a halt in the second quarter of 2011 it started a drastic fall back in the last quarter of the same year.
From the figures of the index the Policy Agenda predicts that it is the monetary situation that will be in the worst position: the base interest rate will remain high and the exchange rate of the forint will be hectic. The index reflecting the economy’s monetary and fiscal situation descreased with 0,29 point during the last quarter of 2011. This was similar to the 0,24 point lessening in the third quarter.
The quarterly index reflecting the operation of the enterpreneur sector showed a 0,59 point fall back, which confirmes the situation detected by Policy Agenda’s SMEs’ confidence index. In the previous quarter there appeared a little bit of optimism, while today pessimism has gained ground again among the SMEs- the analysis states.