This document contains graphs and charts about economic indicators in Hungary such as GDP growth, inflation rates, wages, employment, external debt, stock market performance, banking sector developments, and government expenditures. The charts show that domestic demand and industrial production have been weak in recent years, inflation has been high but stable, and wages and employment have increased modestly.

1. Dávid Németh
chief economist
Eat what you
cook

2. dependence on
foreigners
2

3. vulnerable countries
before the crisis
3
Net foreign liabilities (% of GDP, 2007)
Forrás: IMF

4. increasing national banks
4
0
5
10
15
20
25
30
35
jan.07 jan.13 jan.07 jan.13 jan.07 jan.13
MérlegfőösszegTotal Forgalomban lévő készpénz Értékpapírok
Központi Bankok mérlegfőösszege (GDP %-ban)
Federal ReservesBank ECB Bank of Japan Bank of England
Forrás: IMF, K&H
Total assets of central banks (% of GDP)
Total assets Cash in circulation Securities

5. cost of monetary easing
5Forrás: IMF

6. footprint of stock exchange
6
S&P index (peak=100)
Forrás: BLOOMBERG, K&H
10
20
30
40
50
60
70
80
90
100
110
1 2 3 4 5 6 7
1929-1954 1968-1972 1973-1980
1987-1989 2000-2007 2007-
Bear
Stearns
F Mea
Lehman
Mar 09
End of
QE1
Start of
QE2
End of
QE2
Start of
QE3

7. footprint of stock exchange
7
Dax index (peak=100)
Forrás: BLOOMBERG, K&H
20
30
40
50
60
70
80
90
100
110
120
1 2 3 4 5 6 7
1969-1983 1987-1989 1998-1999 2000-2007 2007-

8. footprint of stock exchange
8
NKY index (peak=100)
Forrás: BLOOMBERG, K&H
0
20
40
60
80
100
120
1 2 3 4 5 6 7
1973-1978 1990- 2000-2007 2007-

9. cost effectiveness
9

10. development of wages
10
real wage increase (% YoY) USA & China wage dynamic

11. wage cost
11
Wage cost per hour (€, % change between 2008 and 2012,
without agriculture and public sector)

12. 600
650
700
750
800
Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13
Employees (excl. fostered workers) Fostered workers
-40,0
-30,0
-20,0
-10,0
0,0
10,0
20,0
30,0
40,0
50,0
60,0
4,0
5,0
6,0
7,0
8,0
9,0
10,0
11,0
12,0
13,0
48,0
49,0
50,0
51,0
52,0
53,0
54,0
55,0
56,0
57,0
58,0
Employment rate % Activity rate% UR% (rhs)
labur market
Number of employees in public sector (thausand)
Labur market (%)
Employment by sector (2012 vs.
2010, thousand)
Forrás: KSH, K&H

13. sectoral breakdown of Hungary’s
external short-term debt
Forrás: NBH, HCSO, K&H
0
5
10
15
20
25
30
35
40
0
5
10
15
20
25
30
35
40
2006Q1
Q2
Q3
Q4
2007Q1
Q2
Q3
Q4
2008Q1
Q2
Q3
Q4
2009Q1
Q2
Q3
Q4
2010Q1
Q2
Q3
Q4
2011Q1
Q2
Q3
Q4
2012Q1
Q2
Q3
Q4
EUR BnEUR Bn
Banks Government Corporate sector Short-term external debt

14. deleveraging in bank sector
Forrás: NBH, HCSO, K&H
-40
-30
-20
-10
0
10
20
30
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Households' net position in bank sector (% of GDP)
FX loans (% of GDP) HUF loans (% of GDP) FX deposits (% of GDP)
HUF deposits (% of GDP) Net balance

15. deleveraging in bank sector
Forrás: NBH, HCSO, K&H
-40
-30
-20
-10
0
10
20
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Corporate's net position in bank sector (% of GDP)
FX loans (% of GDP) HUF loans (% of GDP) FX deposits (% of GDP)
HUF deposits (% of GDP) Net balance

16. corporate lending
Decomposition of the cumulative decline in corporate lending into supply
and demand effects (relative to 2008 Q3)
Forrás: NBH, HCSO, K&H
-25
-20
-15
-10
-5
0
5
-25
-20
-15
-10
-5
0
5
2008Q4
2009Q1
Q2
Q3
Q4
2010Q1
Q2
Q3
Q4
2011Q1
Q2
Q3
Q4
2012Q1
Q2
Q3
Q4
percentage pointpercentage point
Demand effect Supply effect

17. corporate lending by sectors
Decomposition of the change in new loan volumes into supply and demand
effects by industries (2007 - 2011)
Forrás: NBH, HCSO, K&H
-100
-80
-60
-40
-20
0
20
40
60
-140 -120 -100 -80 -60 -40 -20 0 20 40 60 80
Demand(%)
Supply (%)
Real estate
Transport
Construct.
Prof., admin. activities
Trade, repair
Manufact.
Electricity
Hotels, restaurants
Agriculture

18. relative level of outstanding FC
household loans (Dec2008=100)
Forrás: NBH, HCSO, K&H
10
20
30
40
50
60
70
80
90
100
110
120
10
20
30
40
50
60
70
80
90
100
110
120
2005Q1
Q2
Q3
Q4
2006Q1
Q2
Q3
Q4
2007Q1
Q2
Q3
Q4
2008Q1
Q2
Q3
Q4
2009Q1
Q2
Q3
Q4
2010Q1
Q2
Q3
Q4
2011Q1
Q2
Q3
Q4
2012Q1
Q2
Q3
Q4
per centper cent
Loans outstanding to households
Loans outstanding to households (adj. for exchange rate)

19. utilisation of the exchange
rate cap
Forrás: NBH, HCSO, K&H
0
5
10
15
20
25
30
35
40
45
50
0
150
300
450
600
750
900
1 050
1 200
1 350
1 500 Jan-12
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan-13
Jan
Feb
Mar
Apr
May
per centHUF Bn
Outstanding amount Percentage of eligible FX-denominated mortgage loans (right-hand scale)

20. why interst rate of loans will be
forced to decrease
Forrás: NBH, HCSO, K&H
0
100
200
300
400
500
600
700
800
900
1 000
3,0
3,5
4,0
4,5
5,0
5,5
6,0
6,5
7,0
7,5
8,0
Feb-05
Apr
Jun
Aug
Oct
Dec
Feb-06
Apr
Jun
Aug
Oct
Dec
Feb-07
Apr
Jun
Aug
Oct
Dec
Feb-08
Apr
Jun
Aug
Oct
Dec
Feb-09
Apr
Jun
Aug
Oct
Dec
Feb-10
Apr
Jun
Aug
Oct
Dec
Feb-11
Apr
Jun
Aug
Oct
Dec
Feb-12
Apr
Jun
Aug
Oct
Dec
basis pointper cent
Housing loans
Home equity loans
Five-year CDS spread of Hungary (right-hand scale)
Interest rates of Swiss franc housing loans, home equity loans and five-
year CDS spread of Hungary

21. 0
10
20
30
40
50
60
2008
2011
2008
2011
2008
2011
2008
2011
2008
2011
2008
2011
2008
2011
2008
2011
2008
2011
2008
2011
2008
2011
2008
2011
2008
2011
2008
2011
2008
2011
2008
2011
2008
2011
2008
2011
2008
2011
2008
2011
FRA FIN GRE SLO AUS ITA NET EU15 HUN POR UK GER SPA POL CZE ROM EST LAT SLK BUL
Generalpublic expenditures Health Education Socialprotection Other
stagnating redistribution
State expenditures (% of GDP, 2008 és 2011)
Forrás: Eurostat, K&H

22. 22

23. stagnating redistribution
Forrás: Eurostat, K&H
0
2
4
6
8
10
12
14
Greece
Hungary
Italy
Portugal
Finland
EU15
Austria
France
Slovenia
Germany
Slovakia
Poland
Spain
Netherlands
UnitedKingdom
Romania
CzechRepublic
Latvia
Bulgaria
Estonia
2008 2011
General central expenditures (% of GDP)
0
1
2
3
4
5
6
7
8
9
Netherlands
France
UnitedKingdom
CzechRepublic
Austria
Finland
EU15
Italy
Germany
Slovenia
Portugal
Spain
Greece
Slovakia
Estonia
Hungary
Poland
Bulgaria
Latvia
Romania
2008 2011
Healthcare expenditures (% of GDP)
0
1
2
3
4
5
6
7
Slovenia
Estonia
UnitedKingdom
Finland
Portugal
France
Netherlands
Latvia
Austria
Poland
EU15
Hungary
CzechRepublic
Spain
Germany
Italy
Greece
Romania
Slovakia
Bulgaria
2008 2011
0
5
10
15
20
25
France
Finland
Austria
Italy
Greece
EU15
Germany
Slovenia
Portugal
UK
Netherlands
Hungary
Spain
Poland
Romania
CzechRepublic
Estonia
Bulgaria
Latvia
Slovakia
2008 2011
Education expenditures (% of GDP) Social expenditures (% of GDP)

24. subdued production
where is the miracle of car production?
Forrás: National sources,, K&H
Contribution by secto to the growth (% év/év)
-8,0
-6,0
-4,0
-2,0
0,0
2,0
4,0
6,0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Industry Services Construction Agriculture GDP

25. weak domestic demand
development of households consumption in Hungary
Forrás: KSH, K&H
-10
-5
0
5
10
15
20
-10,0
-5,0
0,0
5,0
10,0
15,0
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Consumption (YoY%) Net real wage (YoY%, rhs)

26. 26

27. -8,0
-6,0
-4,0
-2,0
0,0
2,0
4,0
6,0
8,0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Goods Food Trade gds Free services
-6,0
-4,0
-2,0
0,0
2,0
4,0
6,0
8,0
10,0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Alcohol, tobacco vs.CPI
-9,0
-4,0
1,0
6,0
11,0
16,0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Regulated prices vs CPI
Inflation development
government’s help in the year of sneak
Forrás: HCSO, NBH, K&H
Market priced goods & services vs. CPI
Alcohol, tobacco vs. CPI Regulated prices vs. CPI
0,0
2,0
4,0
6,0
8,0
10,0
2006 2007 2008 2009 2010 2011 2012 2013 2014
Inflation evolution (YoY %)
CPI (YoY %) MNB Core (YoY %)
CPI adjusted for tax changes Inlation target
K&H Forecast

28. Global bond
supply (end-2012)
28

29. Forrás: AKK, BLOOMBERG, K&H
financing need
Bond and loan redemption (€bn)
0
0,5
1
1,5
2
2,5
09/2013
10/2013
11/2013
12/2013
01/2014
02/2014
03/2014
04/2014
05/2014
06/2014
07/2014
08/2014
09/2014
10/2014
11/2014
12/2014
HGB REPHUN

30. distribution of households'
government securities
0,0
2,0
4,0
6,0
8,0
10,0
12,0
14,0
0
200
400
600
800
1 000
1 200
1 400
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
per centHUF Bn
Distribution and interest rate of households' government securities
Interest Bearing Treasury Bills
Hungarian Government Bond
Discount Treasury Bill
Treasury Savings Bill
Premium Hungarian Government Bond
Interest rate of deposits with maturity up to 1 year (right-hand scale)
Interes rate of interest bearing Treasury Bills (right-hand scale)
Source: MNB.

31. Investment
tickets and
ETF; 46
Equities; 80
Mortgage and
corporate bond; 10
Pension Reform and Debt
Reduction Fund
31
HUF denominated (HUFbn) FC denominated (HUFbn)
Forrás: AKK, K&H
Investment
tickets and
ETF; 68
Equities;
22
Mortgage and
corporate bond; 5
Cash; 83

32. NBH’s account (end-July,
HUFbn)
32
Forrás: MNB
Assets
External assets 10390 Currency in circulation 2942
Remaining assets 503 Deposits of other MFIs 662
Deposits of central government 1457
Two-week MNB bills held by residents 3699
Two-week MNB bills held by non residents 371
External liabilities 738
Remaining liabilities 1025
Total assets 10894 Total liabilities 10894
Liabilities

33. opinion polls
Forrás: Gallup, Tárki, Szondaipsos, Századvég, Medián, Nézőpont Intézet, K&H
5
10
15
20
25
30
35
40
45
50
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
%
Parliamentary election
MSZP (former
governing
party)
22%
FIDESZ
(governing
party)
48%
LMP (new
green party)
3%
Jobbik (far
right-wing
party)
14%
DKP
3%
Együtt 2014
(new party)
9%
Other
1%

34. support of eurozone
34

35. market environment
Return of currencies (2008 Jan 1=0)
Forrás: K&H , Bloomberg
-40,0
-20,0
0,0
20,0
40,0
60,0
80,0
08-jan. 08-júl. 09-jan. 09-júl. 10-jan. 10-júl. 11-jan. 11-júl. 12-jan. 12-júl. 13-jan. 13-júl.
EURHUF TRY ZAR BRL

36. real interest rate (%)
Forrás: K&H , Bloomberg
-8
-6
-4
-2
0
2
4
6
8
10
01/08 07/08 01/09 07/09 01/10 07/10 01/11 07/11 01/12 07/12 01/13 07/13
Turkey South Africa Hungary Brazil

37. market environment
Hungary’s 5-year CDS vs. region
Forrás: K&H , Bloomberg
-400
-300
-200
-100
0
100
200
300
400
500
600
2007 2008 2009 2010 2011 2012 2013
Czech Poland Romania

38. market environment
Forrás: K&H , Bloomberg
correlation of 5-year CDS & EURHUF
230
243
256
269
282
295
308
321
0
100
200
300
400
500
600
700
2008 2009 2010 2011 2012 2013
Hungary EURHUF (rhs)

39. market environment and
expectations

40. market environment
and expectations
Forrás: NBH. K&H, Bloomberg
3
4
5
6
7
8
9
10
11
12
220
240
260
280
300
320
2006 2007 2008 2009 2010 2011 2012 2013 2014
EUR/HUF Base rate (rhs, %)
K&H Forecast