On Oct. 4, 2005, Standard&Poor's Ratings Services affirmed its 'A-/A-2' long- and short-term sovereign credit ratings on the Republic of Hungary. The outlook remains stable. The ratings on Hungary are supported by its well-diversified economic and export structures, and levels of wealth and growth prospects in line with the 'A' median. The ratings remain constrained by high fiscal deficits and debt levels, and the economy's vulnerability to unfavorable external and domestic developments. Growth prospects in Hungary remain good, with average GDP growth forecast at just less than 4.0% in 2006-2008, as exports and domestic demand are expected to gain pace. Inflation has come down rapidly after peaking at 7.6% in May 2004, with the decline supported by wage
