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GDP in Hungary contracted by 2.4 percent on an annual basis in the second quarter, while there was a slight decline of 0.3 percent compared to the previous quarter. Commenting on the latest figures, Economic Development Minister Márton Nagy said in a statement that “the war and sanctions have had a negative impact on the performance of the Hungarian economy, causing a decline in consumption and a slowdown in investment. The negative external economic environment, including the stagnation of the German economy, did not help either”.

The Minister stressed that “the GDP contraction in the second quarter of 2023 is the bottom of the negative economic cycle, and the Hungarian economy will turn to growth thanks to government measures, with a rapid rebound expected in the third and fourth quarters”.

The fundamentals of the economy are strong, he added, with significant new investment coming in, an increasing number of people – already close to 4.8 million – working in Hungary, while the number of registered jobseekers has fallen to a record low. The automotive and battery industries are performing well and exports are soaring, he emphasized.

The government’s goal is to avoid recession in 2023 for the year as a whole and to achieve 4 percent economic growth in 2024, while protecting pensioners, families and jobs.

To achieve this, the government is taking 14 steps to strengthen the economy.

Economic Development Minister Márton Nagy. Photo: Facebook/Portfolio Rendezvények

First, the government will bring down inflation, which could be in the single digits by October thanks to mandatory promotions, recently increased to a 15 percent rate, and the online price monitor system. According to Márton Nagy, the results are already impressive, with inflation down by 8 percentage points from its peak at the beginning of the year.

Real wages could start to rise again as early as August, boosting families’ purchasing power and consumption,

reads the second point.

In the third point, it is said that the government will maintain the utility bills cut for households up to the average consumption, which means a monthly subsidy of around 181,000 forints (EUR 467) for every Hungarian family.

Regarding the fourth point, the interest rate freeze on residential mortgages will be maintained until the end of the year, which has already protected some 350,000 families from high interest rates and currently guarantees the security of 300,000 families.

As a fifth point, in order to significantly increase the purchasing power of families and stimulate demand, the government increased the preferential limit of the SZÉP Card (Széchenyi Rest Card, a universal electronic voucher in card format that employees can receive from their employer as a fringe benefit within the framework of the cafeteria system) by HUF 200,000 (EUR 517) to HUF 650,000 (EUR 1,680) from August, and extended its use to groceries.

The sixth point is that the government is maintaining full employment, with the number of workers now approaching 4.8 million. Where there is not enough Hungarian labor, the new guest worker scheme will help the economy to function smoothly.

The HUF 1,000 billion (EUR 2.5 billion) Baross Gábor Reindustrialization Loan Program and the HUF 600 billion (EUR 1.5 billion) Baross Gábor Capital Program are being disbursed to all companies. So far, nearly 75 percent of the funds have been disbursed, Márton Nagy highlighted under the seventh point.

Next, the government will continue the Széchenyi Card Program for small and medium enterprises (SMEs), under which the stock of contracted interest-subsidized loans so far this year alone amounts to nearly HUF 600 billion (EUR 1.5 billion).

In the ninth point, it is emphasized that the interest rate freeze for SMEs will be maintained until the end of the year, which protected 60,000 SMEs when it was introduced and currently protects 28,500 SMEs from high interest rates.

According to the tenth point, the government had provided support to tens of thousands of energy-intensive SMEs to finance their increased overheads and energy efficiency investments.

The eleventh point recalled that the leadership in January freed SMEs from changing fixed-rate electricity and gas contracts, leading to tens of thousands of customers’ energy bills falling by more than 50 percent by April 2023.

In the twelfth point, Márton Nagy recalled that they introduced electricity price caps of €200 per megawatt in certain priority sectors from July, freeing 5,000 businesses from their extremely high price-fixed contracts.

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In the thirteenth point, the Minister pointed out that the government is implementing the Factory Rescue Program, allowing 140 large companies to invest HUF 300 billion (EUR 776 million) in energy efficiency and renewable energy, with targeted support of HUF 120 billion (EUR 310 million).

Finally, as the last point, the government will continue to strongly encourage investment, with 35 investments already decided in 2023 through the Individual Government Decisions, allowing for more than HUF 350 billion (EUR 905 million) of investment with HUF 70 billion (EUR 181 million) of support.

Márton Nagy emphasized that

the government’s 14 measures will help consumption to rebound, while production and investment will continue to grow, foreign working capital will flow in and exports will continue to expand dynamically.

The government’s aim is to restore the foundations for domestic economic growth so that Hungary can return to its usual growth path next year, achieving 4 percent economic expansion.

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Via MTI, Featured photo via Pixabay

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