The Hungarian economy may return to growth in the second half of the year, Finance Minister Mihály Varga said at a conference on Tuesday in Budapest.
According to the minister, based on quarterly data, the quarters affected by recession are behind us. The last two quarters of this year will see growth, with inflation falling to single digits by the end of the year, Mihály Varga announced. He said that the global and European economies had come through a difficult period, and the wounds caused by last year’s high energy prices were healing. The pandemic has led to a loosening of monetary and fiscal policies in all countries. The task is now to stabilize balance indicators and put the deficit on a downward path. Reducing the public deficit is key for the economy as a whole, as a public deficit of 3.9% of GDP is expected in 2023, financing is in order, while the deficit ratio and the level of public debt will fall, he said.
The current account balance is improving since it closed the second quarter with a surplus, and the risk of twin deficits is “starting to recede.” The trend in the trade balance has been positive since the spring, with the balance and exports set to break records in 2023. Foreign direct investment (FDI) is also coming into the country at a dynamic pace, he said.
In his speech on returning to growth, Varga said that it was good news that
the labor market remained tight, jobs were protected even in the war situation, and high employment could be maintained in 2023. Real wages could begin to rise from September,
describing it essential for the country to catch up.
Asked about next year’s Hungarian forint exchange rate, he said the primary task of the Hungarian National Bank (MNB) was to establish price stability. The primary task now is to restore balance indicators, and fiscal and monetary policy are working well together on this issue. The government, the MNB, and the opposition agree on the need to reduce inflation, he added.
Via MTI, Featured image: Facebook/Varga Mihály