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Minister of National Economy Forecasts Inflation between 5-6% in 2024

MTI-Hungary Today 2024.01.04.

Economic growth could be around four percent this year after the recovery from the recession began last year, Minister of National Economy Márton Nagy told Demokrata in an interview published on Wednesday.

The minister is optimistic about the new year, stressing that inflation has been brought down to single digits. By October last year, it had fallen to approximately 7.9 percent on an annual basis and to around six percent by December.

This year, he expects annual inflation to be between five and six percent.

The Hungarian National Bank (MNB) has its work cut out to reduce inflation further. According to Márton Nagy, “our (the ministry’s) task will be to restore growth.” The short-term strategy is to boost consumption and investment first, with an important factor being to stimulate private investments.

In addition to boosting consumption, further consolidation of energy prices will be an important factor achieving this objective, with the possibility of reducing electricity and gas costs by more than EUR 10 this year through regulatory prices. He noted that fiscal policy instruments will also play an important role in improving the investment climate.

The long-term strategy is about ensuring competitiveness,

Mr. Nagy explained. One of the pre-requisites for this is the development of an independent energy system that provides green and affordable energy. The other is the issue of the workforce, to further increase the activity of the Hungarian labor supply.

Employment must be further increased, as all possible labor reserves must be used to kick-start the economy. The government will develop a targeted program for this purpose.

If there is no free Hungarian labor capacity, then and only then can foreign workers come into play,”

he underlined, adding that the government therefore plans to tighten the employment of foreign workers.

The minister also mentioned the development of infrastructure, rail and water transport, and road networks among the tools to improve competitiveness. He said that EU funds are available until the country reaches 90% of EU development.

The resources are finite, but there is and always will be foreign working capital.

The advantage of these, he pointed out, is that they also bring technology transfer, something that EU resources do not bring. “If we can get working capital to flow into our country and be reinvested again and again, the investments will be self-regenerating,” the Minister noted.

The only thing to watch out for in this area, he added, is to maintain the multiplier effect. Moreover, one of the conditions for this is that research and development must be effective, for example in joint ventures with universities.

Nagy also said that just as China and the United States are doing, the European Union should use subsidies to improve its competitiveness, even at the cost of increasing its budget deficit.

If others are competing and running with a budget deficit of seven to eight percent and a public debt of around 100 percent, we can be more lenient with ourselves.”

Of course, this does not mean we should go into so-called “fiscal alcoholism,” he added.

The prime minister has devised a new government structure that will help work to restore growth. Thus the changes were mostly driven by a pragmatic intention, dictating that the cabinet should be headed by a minister responsible for the economy, Nagy said. If the prime minister were to trust him with this, he would serve that purpose.

If someone is able to think ahead and foresee three to four or even five to six steps ahead, he will be successful,”

the Minister emphasized, adding that the market’s opinion is important, but the market is not always right, nor are decision-makers flawless.

Inflation Falls to 7.9 Percent
Inflation Falls to 7.9 Percent

Compared with October, prices generally remained stable.Continue reading

Via MTI; Featured Image: Pixabay

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