Briefing notesEconomy & Policy

PM Orbán: Hungary must do even more in the next 10 years

The prime minister and finance minister detailed the country’s past successes and future challenges.

Prime Minister Orbán spoke at the Hungarian Chamber of Commerce and Industry’s ceremonial opening for 2020. There, he reiterated that Hungary’s past 10 years have been the most successful in the country’s last 100 years and that this recent success is an argument for further success. But the prime minister was also realistic about the issues at hand. 

Orbán stated bluntly that the country would be ruined if it did only as much in the next 10 years as it did in the previous decade. Focusing on the current challenge, the coronavirus, the PM pledged government assistance to economic operators who suffer losses due to the epidemic and stated that it is critical to ensure that any resulting economic downturn is not similar to that of 2008-2009. The priority is for Hungary to maintain its present advantage over the EU, that is, a growth rate that is at least 2 percent above the EU.

Orbán further noted that the psychological uncertainty caused by the lack of a vaccine against the coronavirus will not go away soon and that this negative attitude influences economic activity. Due to this, first and foremost, an economic protection action plan will be announced and will focus on those industries expecting, and already experiencing, difficulties; this would obviously include tourism. 

The prime minister added that China took 5-6 months to curb the virus, which means a recovery could be expected here in July – not great news for Hungary’s tourism sector and the many companies who depend on the normal tourist season.

He further told the economic operators present that they had to be prepared for “brutal change;” everyone has to step out of their comfort zone because “if we do as much in the next ten years as in the previous ten, we will be ruined.” The PM was clearly also concerned with the 

EU’s post-Brexit industrial policy strategy, as it contains elements that badly affect Hungary’s competitive advantage.

Listing off Hungary’s achievements since 2012, Orbán noted: a deficit below 3 percent, a reduction in government debt to 66 percent (soon to fall below 60 percent), and a steady decline in foreign currency debt. Also, interest expenses on government debt in 2019 was HUF 900 billion less than in 2012. 

Still, the prime minister emphasized that all of these achievements must now be protected in the next 10 years. He also noted that success is not just about growth indicators; you also need a sustainable structure and financial balance behind it. Orbán attributed Hungary’s success over the past decade to the empowerment of voters, the courage of economic policy makers to take risky measures, kicking out the International Monetary Fund (IMF), and regaining the confidence of economic operators as well as convincing foreign investors to come to Hungary. Now, more is needed, but the country should be proud.

Turning to the debate over the country’s core curriculum as an example, the PM noted that students should learn about Hungary’s strengths, not focus on the country’s losses and failures. The prime minister continued by saying that 100 years after losing two-thirds of its territory and 60 percent of its population, “We are [still] here to talk about how to protect our success over the next ten years.”

Minister of Finance Mihály Varga also spoke and stated that the Ministry of Finance is ready to protect the results of the Hungarian economy via economic policy measures that maintain its growth advantage in the European Union.

Among the most important tasks, Varga continued, were to broaden the scope of economic policy, to continue and accelerate competitiveness measures, to observe the six-year tax and wage agreement, to preserve stability and to attract investments.

Varga noted the global slowdown currently taking shape, and, in particular, how Europe was lagging in automotive and smartphones. He also didn’t mince words when it came to the coronavirus’s impact, stating that it has hurt tourism, airlines, hospitality, and trade, not to mention equity and oil prices. The FM added that the epidemic could have more severe economic consequences than human ones globally in the long term, but also noted that resulting lower commodity prices could benefit Hungary’s economy as well. 

The Ministry of Finance aims for the economy to continue to be fueled by consumption, wage outflows and capital inflows this year. The minister pointed out that recent economic success has protected the Hungarian economy against unfavorable external factors, yielding the highest growth rate in the region since 2016, something he attributed to the country’s debt reduction policy, the implementation of a stable public finance policy and significant FDI inflows.

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