Hungary Executives See GDP Fall, Fear Government Steps: Survey

Most Hungarian executives expect the economy to contract this year amid concern that government measures are “unpredictable,” according to an annual survey published by PriceWaterhouseCoopers.

Fifty-one percent of the more than 170 business leaders polled expect Hungary’s economy to shrink this year, with 39 percent predicting stagnation and 5 percent forecasting economic growth, the survey showed.

“Hungarian executives are fundamentally unsatisfied with government measures,” according to the survey, which was conducted between October and December last year. “The high level of dissatisfaction surrounding the government’s work reflects that regular and meaningful dialog between the parties is becoming unavoidable.”

Prime Minister Viktor Orban’s self-styled “unorthodox” measures, including extraordinary industry taxes, retroactive taxation, the nationalization of private pension-fund assets and government-ordered household energy price cuts, have sapped investor confidence and helped push the economy into a recession last year.

Orban pledged to revive growth this year while delivering on a promise to keep the budget deficit below a European Union limit of 3 percent of output.

Executives see government measures aimed at reducing the country’s debt level and narrowing the budget deficit as “most dangerous” for their business development, while concern about a higher tax burden ranks second among risk factors, according to the survey. Over two-thirds of the polled executives expect their tax burden to increase in 2013 from a year earlier, it said.

Before it's here, it's on the Bloomberg Terminal.