In an interview with Magyar Nemzet, Minister of Finance Mihály Varga stressed that it was important to clarify that the adverse economic effects of the epidemic were most intense in key domestic sectors including automotive, manufacturing, tourism, entertainment, logistics, and aviation. Due to the lack of interventions and surgeries, there was also a serious decline in healthcare, which accounts for four percent of GDP, due to fewer interventions and surgeries.
The government has responded effectively to the crisis with tax cuts, tax breaks, job retention subsidies and investment support introduced in the spring, he pointed out.
The minister emphasized that one of the most important tasks of the government now is to guarantee the viability of the country’s economy.
Future epidemiological and economic protection steps
On the one hand, demand needs to be stimulated in certain sectors, such as tourism and construction. On the other hand, jobs need to be protected, for which it is essential that businesses do not go bankrupt or reduce their capacity. Thirdly, new production opportunities must be provided and investments must be supported. Finally, the government should ensure that the billions of public spending on crisis management support should go toward efficient and competitive economic solutions.
The finance minister said that the Hungarian government would use EU funds for a number of public investments, which previously were to be funded by the Hungarian budget. He noted this will free up domestic resources for tax cuts and investments that cannot be supported by EU funds. In addition, one of the most important tasks of the current period is to accumulate as many reserves as possible, because no one knows how long the economic impact will last. The reform of the financing system also serves this purpose.
Varga also said that all travel restrictions can be lifted once there is a coronavirus vaccine. If it is available in the second quarter of 2021, Hungary’s economy could grow by 4-5 percent. If the vaccine isn’t even available by the middle of 2021, and vaccinations don’t start, then Hungary might be able to record GDP growth of slightly more than zero. A third scenario, however, is that there will be a vaccine, but due to the protracted recovery, GDP will only grow by around 3-4 percent, he added.