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Matolcsy: Coronavirus Crisis Can Lead to Further Acceleration in Economy

Hungary Today 2020.03.18.

Central Bank (MNB) President György Matolcsy summarized how the Hungarian economy could quickly be restarted after the shock caused by the coronavirus pandemic.

“Why not restart the economy while accelerating everything that takes us closer to our future goals?” Matolcsy posed the question in a new post on blog novekedes.hu, soon to start-off with the good news as he thinks that by now it has become clear that the world economy won’t face a global recession similar in size to the crises of 1929-33 and 2007-2009.

In his view, China and Asia will recuperate quickly, essentially making up by the end of the year for what was lost in the first half. The US and the Anglo-Saxon world won’t experience the level of crisis like China, South Korea, or Italy, and will get over the hock of the first half of the year in the second half.

He argues that although the EU is still heading into the crisis, in the second part of the year it will return to its previous state, but that would result more or less in stagnation.

As for Hungary, the harder parts are still to come, but with appropriate crisis management, “2020 can still be protected and 2021 won,” he argues.

He then lists 12 points the Hungarian economic protection and restart could be based on:

  1. The immune system of the Hungarian economy is strong. Outstanding past growth, good balance indicators and high employment rates, together with the right government programs, provide a good basis for a successful economic recovery.
  2. Although some sectors have indeed halted or significantly slown down (e.g. tourism, hospitality, transport), the economy as a whole won’t halt. Public services, state-owned enterprises, the financial system, the food industry, the construction industry, sectors producing for the domestic market, and exporting sectors will continue to perform in the coming months.
  3. Targeted economic protection measures will maintain the successful growth formula of recent years. This is the 2-3% increase over the EU average that is based on dynamic investments, expanding consumption, advanced technology, and capital imports, and double-digit credit expansion.
  4. The key to economic protection is to preserve jobs and strengthen vulnerable business groups.
  5. Jobs can be maintained by investment dynamics, consumption levels and credit lending, and these can be supported by targeted job protection programs financed from budgetary sources.
  6. The key of economic protection is the protection of the workplaces and the company- the real secret is, however, the new perception of time.
  7. We must accelerate everything, and the pace used during normal times is no longer enough: we need to accelerate! All determined investments need to be accelerated, primarily in the public sector but everywhere with the encouragement of state incentives.
  8. A new home-building scheme must be introduced quickly that safeguards the dynamism of the housing market. The new entrepreneurial tenancy program that is linked to green, urban rehabilitation is already ready: let’s get it started quickly.
  9. Transitioning to a digital economy must be accelerated both in public administration and in the corporate sector.
  10. Green programs must be accelerated, from planting to irrigation, from the use of solar power, to a transition in transportation.
  11. Cash flow needs to be accelerated, new central bank programs for accelerated loans.
  12. Tax administration and authorization procedures need to be sped up and thus simplified.

Coronavirus Pushes Forint to New All-Time Low

featured image via MTI/Zsolt Czeglédi