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This first chapter of the OECD’s Economic Survey for Hungary looks at the main policy challenges in maintaining a fast pace of growth and introduces the issues tackled in the chapters that follow. Hungary’s growth over the past decade has been reasonably strong, though in the early 2000s it was driven too much by fiscally induced domestic demand growth. However 2004’s performance has seen a welcome shift back to investment and export led growth. There are four key policy challenges if this healthy pace of growth is to be maintained: i) there has to be a smooth entry to the euro area; ii) further work is needed in building sustainability in public spending, this Survey looks in depth at reform of the health care system; iii) further policy efforts are required to raise employment potential so as to increase Hungary’s relatively low labour utilisation; and iv) more work is needed on creating the right environment of business regulation and support, this Survey looks specifically at the government's recently increased focus on innovation