There is no doubt that most of the people that turn out to vote on the referendum (March 9) initiated by Fidesz will vote "yes", however, the referendum might not be valid due to low turnout, shows the opinion survey carried out by Marketing Centrum. According to the results, the pollster estimates a 33% turnout on the referendum. 24% of inquired said that they will surely vote and that they will vote with "yes". On the other hand, 32% leans towards supporting the referendum initiative, but has some doubts about its goals and/or purpose, so this group of people is inclined to stay at home. 8% of respondents are described as sure "no" voters, while 36% does not want to take part in the referendum. Compared to a January survey, the percentage of people that think that the government will fall and/or that PM Ferenc Gyurcsany will be removed declined. Only 6% think in February that early elections will take place after the referendum (14% in January), while as much as 69% believe that both the government and Gyurcsany will stay in place (66% in January).

Quite contrary to the above poll, the Publicus opinion survey predicts a massive turnout (68%) and clear majority of yes votes (59-65% of total votes, depending on the question). However, it was also noted that the actual turnout is expected to be lower than the declared one. That comment has been often reiterated by other pollsters as well. Overall, judging from the results of various polls we can summarize that more than 50% of those that vote will support Fidesz' initiative (which is understandable as only the junior coalition party SZDSZ encourages people to vote "no"), however, it is questionable whether the referendum would be valid. According to the constitution, "national ratification referendum shall be considered successful if more than half of the votes of the citizens voting are valid, but at least more than one-quarter of all eligible voters have given the same answer in the referendum."

The merchandise trade deficit posted a EUR 170.2mn deficit in December, according to the data of KSH. Compared to the preliminary release, the December trade deficit was increased slightly. Export growth decelerated slightly in December, while import growth picked up, reaching 6.4% y/y and 7.1% y/y respectively (in EUR terms). Thus, apart from January and December, the expansion of exports has outpaced the import growth in all months in 2007. Worth noting that apart from December previous figures in 2007 were revised as well, resulting in a EUR 135.9mn downward revision of 2007 deficit. The merchandise trade deficit stood at EUR 307.6mn in 2007, which compares to a EUR 2.37bn deficit recorded in 2006. Export growth stood at 16.2% y/y in 2007, outpacing the 12.2% y/y increase of imports. The better results reflect the generally favourable external environment and some downward pressure on imports arising from the domestic demand squeeze.

Export growth slowed down in November and December, on the back of weaker expansion of exports of machines and equipment, which account for more than 60% of total exports. Also, manufactured goods exports, decelerated notably. On the import side, similar changes are reported in manufactured goods category, while machine and equipment import growth strengthened in December, following a deceleration in November. Also despite a slight deceleration, import growth of energy remained in the double-digit territory, which is hardly surprising given the pressure from rising oil prices.

There are already signs of weakening export growth due to deteriorating external environment. Given that export-driven industrial growth is an important source of economic growth (especially when domestic demand is weak), a more pronounced slowdown of exports and industry does not bode well as far as prospects for a moderate revival of GDP growth are concerned. However, a part of the recent slowdown of export growth could be blamed on the change in production lines (preparations for rolling out new car models). At the same time, the poor domestic demand which is putting downward pressure on import growth might continue facilitating the improvement of merchandise trade balance in the near future. Overall, we think that the merchandise trade balance will neither improve nor deteriorate significantly in 2008.