Hungary’s economy is set to stage a swift recovery from the second quarter and achieve growth of 4-5 percent for the full year, Minister of Finance Mihály Varga said in an interview with Wednesday’s business daily Világgazdaság.
Budget amendments to be submitted to lawmakers on May 4 target a declining deficit, Varga said, adding that a shortfall of 7.5 percent and public debt level of below 80 percent of GDP was likely by year-end.
Public debt in the European Union averaged 100 percent last year, he noted.
Varga said it was important that the debt level should not rise this year and resources should be provided for government measures to combat coronavirus and restart the economy while reducing debt levels simultaneously.
He said investors were looking out for when and how fiscal policy would return to normal as the pandemic subsides.
Varga noted that Hungary’s vaccination drive is well ahead of the rest of Europe and the economy was ready for relaunch. A return to growth would happen “surprisingly fast”, he said. The second half of the year will see robust growth data, he said, adding that current calculations indicate full-year growth of 4-5 percent.
The minister insisted that the government had from the very beginning combined curbing the downturn in the last 13 months while looking ahead to the post-pandemic period, aiming for a proportional response: the amount spent on tackling the pandemic was only 20 percent of the roughly 5,000 billion forints (EUR 14bn) mobilised last year, while 4,000 billion has been reallocated in the budget towards boosting the economy.
This response was in stark contrast to the approach of other European countries, he said. As well as focusing on protecting jobs and the survival of companies, the government has also provided major support for exports and new investments, he added.
The minister said that the starting point for fully refloating the economy would be once 2.5 million people have been vaccinated. Three months of the debt-repayment moratorium are outstanding. Asked whether an extension was possible, he said the government was continually monitoring the situation in consultation with economic players, including the Hungarian Banking Association.
Featured photo illustration by Zsolt Czeglédi/MTI