During the last two years, the Budapest Stock Exchange has undergone a unique and spectacular transformation. Unique because it accurately reflects the specific nature of the economic and political transition of the country. Despite the bold, decisive reforms of the early 1990s, which contributed radically to increasing the efficiency and profitability of businesses, the macroeconomic imbalances prevented the success of these developments. Whilst net profits of companies listed on the stock exchange shot up by 166% between 1993 and 1995, the stock index actually dropped by 12% (both measured in dollars), which clearly illustrates investors' uncertainty in this period. However, the Hungarian austerity package of 1995 turned the situation around, ushering in a new era of confidence in the economy and, by the end of 1996, the remarkable progress of Hungarian companies finally came to be recognized in their share price. The last six months have seen further encouraging economic results, the effects of which are, at last, beginning to be felt by the population as a whole.
Fundamental to the progress made has been the tight rein kept on inflation, the year end target is 18%, down from 19.8% last year. Moreover there has been the improvement in the current account balance, 5.7%