Economy & Policy

The Hungarian economy can remain on a growth path

War-related sanctions are, nevertheless, having a negative impact on both the European and Hungarian economy.

After last year’s growth of more than 7 percent, Hungary’s GDP could expand by 3-4 percent this year, Finance Minister Mihály Varga said in an interview published in Figyelő on Thursday.

He recalled that the previous growth forecast had to be reconsidered, as the inflation trajectory had changed and the half-million Ukrainian refugees so far have required extraordinary measures.

Varga said that the deficit and debt measures were affected by the impact of COVID-19. He stressed that the numerous investment stimulus programs, the post-employment subsidies, and tax cuts all served to ensure that the Hungarian economy emerged from the pandemic with as little damage as possible and that jobs were preserved.

He said it was the right decision to increase Hungary’s financial reserves at the end of last year, introduce spending limits in ministries via a HUF 350 billion spending ceiling, not allow ministries to spend their entire 2021 allocations, postpone the start of HUF 755 billion investments and cut this year’s deficit target from 5.9 to 4.9 percent.

The minister also said that the non-reimbursable part of the EU recovery program will amount to HUF 2 billion, and that the loan part will be used as well. He said that a good part of it would also be used for energy reform, diversification and the green transition.

The minister said that in 2010, Hungary was a country dependent on the IMF, on the verge of bankruptcy, with weak growth indicators and significant risks. Since then, the country has moved from bankruptcy to the top of the EU growth ranking, he added.

Varga stressed that “the stakes of the election are whether the country continues to catch up or falls behind and returns to where it was before 2010.”

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