Facts & Statistics

FM Varga: Hungarian economic performance has increased significantly

Recent data confirm that the government’s economic protection measures have been effective.

Minister of Finance Mihály Varga emphasized that by protecting jobs, continuing tax cuts and supporting investment, Hungary could emerge stronger from the crisis and return to its dynamic growth trajectory of recent years.

The Hungarian economy grew by 11.3 percent in the third quarter compared to the previous quarter, which shows that the economy was able to recover quickly even after the spring shut down. Compared to a year ago, GDP declined by 4.6-4.7 percent, but the annual rate of decline might be significantly smaller than analysts expected, he added.

In recent months, trends in the labor market have also been favorable, with wage increases of around 10 percent and an investment rate of 28 percent being at the forefront of the Union, even in the face of a downturn, Varga stressed. 

Detailed data are not yet available, but it can be seen that the growth of infocommunications and financial services helped Q3 performance. Families’ home loans also performed better than previously expected. The transportation, commerce, tourism, hospitality and entertainment sectors suffered the most, the minister added. 

Varga mentioned that the rate of value-added tax (VAT) on food delivery has been reduced from 27 percent to 5 percent, and next year, the housing VAT will be reduced from 27 percent to 5 percent as well; meanwhile, the small business tax rate will be reduced from 12 percent to 11 percent.

In the fight against the coronavirus epidemic, the government’s position maintains that preserving jobs and creating new ones is the most important task. The government will assist companies that continue pushing developments during the epidemic with support programs worth hundreds of billions of forints, he added.

The minister said that within the framework of the Corporate Investment Support Program, developments worth a total of HUF 281 billion have been implemented in Hungary so far, for which non-refundable grants of HUF 116 billion have been allocated. 

The latest subsidy granted went to the 100 percent Hungarian-owned Szatmár Group, which has been a key player in the Hungarian economy for more than 20 years. The government has provided HUF 680 million in support of its latest investment of HUF 1.4 billion to increase the company’s warehouse capacity. The automated warehouse has made the supply of Szatmár stores faster and more predictable, plus they can now also open new specialty stores, Varga noted.

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