ABSTRACT
Hungary's economic transformation can be assessed from different viewpoints. In 1992, Hungary may have the highest surplus in the current account balance and, together with Poland, the highest foreign exchange reserves. Real economic and monetary developments sharply differed during the first years of transformation. The higher export share of total production was accompanied by better prices in exports than in the domestic market. The external sector became the success story of the Hungarian economy in the transformation process. Although the expenditures remained within the planned framework, the pattern of expenditures is also responsible for the critically high level of the budget deficit. Hungarian firms feeling external competition are in the same group, as devaluation is expected to bring about a higher level of protection of the domestic market and producers. In August 1992, there were more than 64,000 firms in Hungary, or 20 percent more than by the end of 1991 and more than four times the 1989 figure.
