The ratings on the Republic of Hungary are supported by good economic prospects, with Hungary's GDP growth forecast to accelerate to 3.8% in 2006-2008 following a projected slowdown to 3.5% in 2005, from 4.0% in 2004. The rate of expansion for 2005 is lower than previously anticipated, reflecting weaker EU growth prospects and the only gradual recovery of domestic demand from the 2004 slowdown, but exports and domestic demand are expected to gain pace thereafter. The profile of Hungary's economic growth is now more balanced than in previous years, with a higher contribution from net exports and investment, and an easing of private and public consumption. Inflation has come down rapidly after peaking at 7.6% in May 2004, with the
