The government is also under pressure to constrain expenditure and ensure fiscal consolidation to maintain price stability. In addition, now that EU subsidies will be scaled back, Greece must improve its efforts toward fiscal prudence, more flexible labor markets and more competitive exports. Some feel that the expanding economy here could be too much of a good thing. The National Bank of Hungary, however, is poised to take action in the form of an interest-rate hike, if necessary. Such diligence in keeping inflation at bay will likely be rewarded as Hungary continues to position itself for EU membership.
Inflation is the biggest threat here.
Worries will begin to subside if the euro posts a recovery as expected and oil prices start to ease. The strong inflows of foreign direct investment, which contributed to inflation fears are likely to be curtailed this year. Private consumption is leading a rebound in the country's economy, which hasn't yet lead to higher inflation. The dark cloud is the fractured peace agreement with Palestine. The degree to which the renewed fighting affects the economy and business is debatable, but even the perception of increased risk is undesirable.