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Facts & Statistics

Hungary could reach the standard of living level of the most developed countries by 2027

The most significant change is expected in the area of digitalization.

The pandemic could put Hungary on track to reach the income level of the most advanced countries by 2027, with a two-year delay, while non-EU countries will slow down their catching-up, according to a summary provided to MTI on Tuesday by analysts at Euler Hermes Credit Insurance and Allianz Research.

The analysis shows that in the short term, the welfare gap between rich and poor countries will narrow as the negative economic effects of the pandemic in 2020 initially hit developed countries hardest. However, looking at longer-term models, they found that in the medium to long term, the welfare gap could widen further, as developing countries have fewer means to mitigate the negative economic impacts and are slower to vaccinate their populations. 

In the new post-global economic environment, cheap labor will no longer be a priority for investors, and emerging countries may lose their main economic attraction, which has been a major contributor to the rise of the middle class in these societies. They also face the threat of indebtedness.

According to the experts, a country is classified in the most advanced high-income group when its per capita national income based on purchasing power parity (PPP) reaches 50 percent of that in the United States. The Czech Republic, Slovenia and then Estonia were the first countries to reach a high income level. They were followed by Lithuania in 2018 and Poland in 2019. Hungary could reach the standard of living level of the most developed countries by 2027 instead of 2025. 

The most significant change is expected in the area of digitalization. The use of artificial intelligence, robotization and the spread of the data-driven economy have reached a stage where they have the potential to completely transform the world of work. As a result, the cost of labor is increasingly irrelevant, which could lead to a widening of the global wealth gap.

The dominance of climate protection and green considerations can help the economies of developed countries in particular. Analysts expect a surge in investment in green sectors of the economy, driven by changing consumption patterns, especially in higher income countries. Consumers are increasingly favoring local producers, while the circular economy model and the sharing economy are gaining ground.

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