Tamás Szemlér Table 2. Employment and growth in Hungary(change in%) 2005 2006 2007 Number of employees app. 0 0-1 0.5-1 Unemployment rate,% 6.5-7 6.3-6.8 6.2-6.4 Activity rate,% 60.5-61 app. 61 61-61.5 GDP 3.5-4 app. 4 4-4.5 Source: National Reform Programme for Growth and Employment(2005), p. 7. 2008 0.5-1 6.1-6.3 61.5-62 4-4.5 Indicators concerning stability have been problematic for Hungary for a long time. In the case of price stability, the tendency of improvement is expected to continue: the inflation rate is estimated to continue to decelerate gradually, and to be around 2% to 3% in 2008. However, external factors 3 (e.g. high oil prices) as well as(at least partly) internal problems(e.g. doubts about the strength of the national currency) and measures(e.g. increasing tax rates) can endanger this path. Table 3. Inflation(%) 2004 2005 2006 2007 2008 annual average 6.8 3.5-4 app. 2 app. 3 2-3 Source: National Reform Programme for Growth and Employment(2005), p. 9. Most of the above-mentioned potential internal dangers for the NRP are related to the high level of public deficit. As can be seen from the data in Table 4, due to the sharp divergence of the public deficit from the original plans, the 2004 version of the CP had to be modified in December 2005. The increase in general government net lending also led to a divergence in the gross debt figures. 3. Differences from basic assumptions of the CP(see Government of the Republic of Hungary, 2005, p. 38) can considerably modify the prospects. Apart from fully external factors, the HUF/EUR exchange rate(estimated to be at 252.5 in 2006(annual average), but being around 280 at the beginning of July 2006) can cause important changes. 122