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Hungary's central bank revised its growth forecast for the economy, in its quarterly inflation report released on Wednesday.
The economy is now projected to contract 0.2% in 2010, less severe than the 0.6% contraction forecast in November.
In 2011, the economy is forecast to grow 3.4%.
Meanwhile, the average consumer price inflation rate is now expected to hit 4.4% this year, revised upwards from 3.9%. The core inflation rate has been revised up to 3.2% from 3%.
The central bank added that the government needs to take further measures to cut its budget deficit, which it projects to hit 4.2% of gross domestic product by year-end.
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